よく is just "often". している/しています is the ている/ています form of する. しています → していました (past).
Basically, playing squash was a regular habit in the past, and that habit is no longer true now. I'm pretty sure you know how ている works. There's a video lesson under "Japanese Basics" in "Japanese Lessons" if you need a refresher :)
Yeah, pretty much — よく does indeed mean "frequently, often" here, and していました is past continuous / past progressive used for habitual past actions. Would be 過去進行形 in Japanese. It's not exactly 1:1 with the English grammar equivalent.
Keep in mind していました / していた often implies the habit is no longer true, but that comes from context.
PS: Personally, I'd translate the original sentence to "My parents often played squash" or "My parents used to play squash often".
I’m okay with the original translation. The habitual nature of the activity is implied.
I wasn't saying the translation was wrong or anything, just that for learners it can help to make よく explicit in English. I'm also fine with the original :)
