Yes, it's fine. You missed the 'r' in 'years', but apart from that, it's perfect. I would disagree with Franklinthemanlol's version being more natural.

It's correct! Another alternative would be 'I met lots of (new) people when I was working in Spain two years ago' :)

It's OK. Better still: I met lots of people when I was working in Spain two years ago. If you begin with "two years ago", there's a shift in focus, so you really should say: Two years ago, when I was working in Spain, I was meeting a lot of people. The past continuous here indicates a temporary habit in the past.

In addition to what everyone else said, you should know that "lots" is informal, not really correct English. "Two years ago, when I was in Spain, I met many people" would be more correct if you were speaking in a formal (e.g. professional) setting.

Yes, it's perfect.