They are both correct, you are right. They have slightly different meaning, though: "Did you spend...," This is in the perfective, i.e. completed action, and is more of an objective way to pose the question. "Were you spending..." This is in the imperfective, i.e. in the process of something. This way sounds more casual, almost like you're leading the question, like, you know your friend spends too much money, and you're insinuating that he/she was spending too much money, like they usually do. It could also sound judgmental or possibly rude if you're saying it to someone you don't know well.

'Did you spend' is correct. When it comes to spending, we don't use the past continuous. It refers to the past and is considered as one action, rather than a set of actions. Therefore, if you want to talk about spending money on the past when you action was interrupted, you would use 'busy paying. ' 'Were you busy paying when I called you?' in some contexts, you could use 'busy spending', but it's safer just to use the simple past.

“Did you spend a lot of money…” is basically asking the person about (now that they’re home) the total amount of money that they spent on their entire vacation, and if it was a lot. But it doesn’t necessarily signify someone’s mindset while they were on the vacation. It could be just because the hotel, airfare, food, and rental car was expensive. “Were you spending a lot of money” is asking the person how they were “living” day to day on their vacation. Like if they had a very carefree mindset and they didn’t worry about anything they were buying and the cost. For example, shopping. They are basically the same (spendings lot of money or not) but the idea behind it feels different. ♥️

Yes. "Did spend" states an accomplished event. "Were spending" creates an image of activity. Using a present participle is equivalent to showing a photograph. When you say "you were spending", it has the same effect as pulling out a photograph showing an image of the person spending money.

Did you spend....? Is correct as it is in the past simple tense. An action already completed in the past.