What kind of past habit fits this text? "were always doing" or "used to do" [closed]

It seemed like we were always

• playing outside
• in detention
• off on some trip or other
• involved in some escapade or other ....

(note the evaluation here is also set back in the past, 'seemed')

is the usual way of showing the mindset of foregrounding prominent memories (so that regular events are promoted hyperbolically to durative consideration).

Only the first example above uses the past continuous, though.

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Your own 'There was a special place in the woods where we would play every day.' shows a perfectly fine example of the use of 'would' to show the habitual past. But using 'would' after 'it seemed like' forces an irrealis sense, so not a choice.

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'It seems/ed like we used to ...' [play, etc] defaults to a concessive statement, again not what is required.