Perhaps, since the sentence is in the preterite tense the action has finished and only occured once in the past? While you are not wrong your form is in the Imperfect tense. I believe.
"I heard when it played the violin" makes no sense in English, and thats what it gave me as the translation.
Is it true that this translation can't be "I heard it when you played the violin"? Can "tocó" refer to "usted" in this case?
Yes it COULD be what you said, but really it's not very likely in real life. They put the "lo" in there to give the impression that it was a him, or maybe an it...but the use of "tocó" without a pronoun qualifier leaves the impression that the first pronoun was to be used for both...and since "it" wouldn't make sense for both, him is the logical choice. It is DL's way of trying to teach us it seems. Hope that helps.
Yes, the two Duolingo accepted translations support your idea: -- -- -- "I heard him when he played the violin." -- -- -- -- "I heard IT when IT played the violin." -- (Probablemente un orangután tocó el violín.) :-)
Pienso que un gato tocó el violín. "Hey diddle diddle, the cat and the fiddle..."