Translation:He said that we were spending too much time together.
Is there any reason why "he said we were spending..." is not accepted? Sounds like perfectly acceptable English to me.
It is accepted without "that". You might have made a typo or error in the last part of the sentence?
I wrote "He said that we were passing too much time together." Marked wrong. I see no difference between using spending or passing in this context.
"Pass the time" is perfectly correct English. When I submit a correct answer I expect it to be marked as correct. This is disgusting.