Isn't decidimos both present and past tense?
Would 'we decided to walk' be correct?
If that is the case, how can i differentiate between past and present tense in this sentence?
The same way you differentiate between "I put" and "I put".
Yes, and you only know this by the context!
Why the answer "We choose to walk" is wrong?
"to choose" = «escolher»
'We decided to take a walk"
Is it correct?
Isn't take a walk dar uma caminhada? Caminhar is to walk, not a walk.
We decide on walking?
generally the infinitive verb (i.e. caminhar) is translated in a sentence as "to ___" (i.e. to walk) as opposed to the gerund/present progressive (walking/caminhando).