Past continuous or simple past tense

Solution 1:

Here is a good explanation of why the progressive can't be used; it is found in A comprehensive grammar of the English language. It must be understood first that the verb "to be" in the sentence is a so called stative verb.

(CoGEL § 4.26) State, event, and habit with the progressive

The three verb senses of state, event, and habit are differently interpreted with the progressive :
(a) STATE PROGRESSIVE
In many cases the progressive is unacceptable with stative verbs:
♦ We own a house in the country.
♦ *We are owning a house in the country.
♦ *Sam's wife was being well-dressed.
This can be explained, in part, by the observation that stative verb meanings are inimical to the idea that some phenomenon is 'in progress'. States are 'like-parted' in that every segment of a state has the same character as any other segment: no progress is made. (Contrast We are building a house in the country.) Where the progressive does occur, it is felt to imply temporariness rather than permanence:
♦ We are living in the country. [temporary residence]
♦ We live in the country. [permanent residence]