I'm a bit late on this, but will add my 2 pennies worth anyway

Sometimes I don't think kids just don't realise it's rude to play while you talk. It's just they haven't learnt that one yet.
So, if it happens when I'm talking, I just put my index finger to my mouth and say Sshh gently. If they carry on, I take their wrists (very gently) and place their hands on their laps. 3rd warning and the piano lid comes down. No harsh talk, no tellings off. Just action to get the appropriate behaviour.
Some kids have a problem listening and for those, I tend to ask questions rather than talk. How can we make this sound more musical? What about the phrasing? Did you put in any dynamics here? Or just "tell me about this piece and how you can make it sound better?"