This is the correct option because this sentence stands for the imperfect. So imperfect tenses talk about action that occurred regularly or frequently or that were in progress in a moment in the past. So todo el tiempo means all the time and this tells us that the sentence were in progress in a moment in the past. The other options talk about a specific moment in the past. Finally:
<em>En las vacaciones con mi amiga Laura nos bañábamos </em><em>todo el tiempo </em><em>en la piscina de Marcos.</em>
