The DL answer is not really accurate because the infinitive (to use) has been substituted for the subjunctive. The literal meaning is something like: we wanted that she would have used it. But of course one would never say that in English. In real life the most appropriate translation would depend on the context since there are no perfect translations of Italian congiuntivo to English in many situations. But here without any context one has to be a bit random I guess.
You can't translate everything literally. The Italian sentence is the way you would say it in Italian, and the English sentence is how you say it in English.
sfoehner is completely right about this. The only respect in which I would differ is the implicit suggestion that the English "We wanted her to use it" is not a literal translation of "Volevamo che lei lo usasse". Certainly it is not a word-for-word translation, since translating word for word here does not result is a valid English translation of the sentence at all, but it is a literal one.
With just one caveat: depending on context, the correct literal English translation might be "We wanted her to use him".
It's very difficult to discuss this sentence in hopes of developing a rule of translation. The most important aspect, which is missing from the context, is when she was to use "it". The Italian is somewhat uncertain as to the time-frame, but Duo's translation makes it even more uncertain. Did we want her to use it in the past, and she never did? Did we want her to use it in the recent past, but she never did and is still not using it?
What that says is that there are a number of possible English translations of this sentence, some of which I am certain Duo would not accept.
I don't see that the English is any more or less uncertain about the time-frame than is the Italian.
No native English speaker would say that, though you hear foreigners say it quite often, translating word for word from their own langauges. An English speaker would understand what is meant though: what is meant is what an English speaker would mean if s/he said "We wanted her to use it".
The Italian could also mean "we wanted her to use him" of course.
I cannot hear that this is "volevamo" and not "volevano", and from the context it could be either. If the sound is so poor, it should not be used as a listening exercise. Reported 23.3.16
However if it was volevano the stress would be on the 'e' so it would sound completely different from the word "volevamo."
Joseph: It'd be the wrong past tense - 'had + a past participle' results in the past perfect tense. This is the simple past tense. or imperfect past tense. Since "wanted" in English is both a simple past tense 1-verb form, and also a past participle, it might be confusing. In Italian the forms used are distinctly different "volevamo" vs "avevamo voluto".