Question

l (walk) down the street the other day when i (bump) into an old friend of mine.
We (be) friends at university but we lose) touch. We (talk) for a few minutes
and he (tell) me that he (work) with computers for the past two years. i(can)
hardly believe it, he (do) a drama degree at university and (act) in several
films when he was younger. It (be) funny how things (turn our) sometimes.

Answer 1

Was walking
Bumped
Were
Had lost
We had been talking
Told
Was working
Could
Did

Answer 2

l was walking down the street the other day when i bumped....

We had been friends at university but we had lost touch. 

We talked ИЛИ (we were talking) for a few minutes and he told me that he had been working for the past two years.
I could hardly believe it, he had done a drama degree at university and had acted in several films when he was younger. 
It is funny how things turn out sometimes