If it was an action that was only performed once, shouldn't it be the passe compose?
You are right, or there is something missing:
- un jour, je parlais avec lui quand sa femme est arrivée = one day, I was speaking with him when his wife arrived.
Why is "her" not an option for the solution? Lui hover hint includes: him, her, it...?
Only "him" here, meaning = avec + il ("lui" is the stressed form of "il")
With her = avec elle
Stressed pronouns are used as multiple subjects and as indirect objects, after prepositions:
He was speaking with me = il parlait avec moi
He was speaking with you = il parlait avec toi / vous (singular or plural)
You and I were speaking with him = toi et moi parlions avec lui
He and you were speaking with her =lui et toi / vous parliez avec elle
They was speaking with us = il parlait avec nous
I was speaking with them = je parlais avec eux / elles