The second sentence might sound odd because "while" not "when" is more commonly used in conjunction with the past continuous. "While" has the sense of "for a non-specific duration of time." This pairs well with the past continuous to describe an event that happened during a prolonged, non-specific time in the not-too-distant past. "When" on the other hand has the sense of "a specific time", and as such works well with the past simple.
However, in your example, there is no discernible difference because the time frame itself is non-specific to the reader. We don't know how long you worked together. As well, being nice is an action that is hard to quantify in time. Because of that, the past simple or the past continuous can describe that period of time equally well. Moreover, "when" with the past continuous has a good argument in its favor, in that we commonly use "when" with the PC when referring to "ages or periods of time in the past". An example of this would be "When I was in college, Adidas sweatpants were the fashion." Time in college is a specific period of life. Compare that to "While I was walking the dog, I remembered my mom's birthday." Walking the dog here is a non-specific time frame, and so while would be expected. In the case of your example, your employment with the woman who was nice to you could be represented as a "period of time."
Per the BBC: We also use when, not while, to talk about periods of time in the past.
In a completely different direction, the one criticism that is often levied against the past continuous is that, when used unnecessarily, it sounds long-winded.