"We were playing soccer."
Translation:Wir haben Fußball gespielt.
Wir waren Fußballspielen.
I'd say you hear this quite often in spoken german (or at least constructions like this). In this type of construction to be/sein is a Vollverb and whatever follows is just some kind of description. I think in spoken language the "beim" is just dropped which would make this sentence more clear and in the case of a letter (or an examen) I'd either write beim or use a different construction.
Wir waren Fußballspielen. Wir waren beim Fussballspielen.
Ich war Einkaufen. Ich war beim Einkaufen.
Sie waren Schwimmen. Sie waren beim Schwimmen.
I cant find a universal explanation or rule for this. But this exists and you hear it oftne (depending on the region, you might not hear that, but at least here "Ich bin Fussballspielen" and "Ich war Fussballspielen" is used more often than the standard präteritum version.
There are no continuous tenses in German, so this sentence is just nonsense.
If you want to use Präteritum, you should say: Wir spielten Fußball.
“Wir waren beim) Fußball Spielen” is not a continuous, at least not yet. It expresses that “we” were at some unspecified place to play football. As a consequence, you would typically hear this sentence as an answer to the question “where were you” (in this case you might imagine a child coming home in the evening).
As such, it is an imperfective and it may plausibly develop into a true continuous over time (this is exactly how continuous frequently emerges, including in English), but we haven’t reached that stage yet. So if you see your partner on the couch, you wouldn’t ask “was bist du machen? Ich bin lesen.” (That last sentence is grammatical, but only if you mean “I’m away reading (maybe at the library).”)
This might be nonsense for friends of grammar but in everyday life in spoken language a construction like this is not unusual. Used it myself some decades ago ;-)