Final answer:
The underlined verb phrase 'was chatting' is in the progressive aspect, indicating an action that was ongoing in the past when another event occurred.
Step-by-step explanation:
The underlined verb phrase in the sentence 'The conductor was chatting with passengers when Imelda boarded the train.' is 'was chatting'. This verb phrase indicates that the action was in progress at the time when something else happened (Imelda boarded the train).
Therefore, the verb phrase is in the progressive aspect. The progressive aspect is used to show that an action was ongoing at a specific time in the past.