Learn French: J'étudie l'espagnol avec un ami. - I study Spanish with a friend.

Étudie comes from the regular -er verb étudier (to study). To make the je (I) form, you drop the -er and add an -e. Because étudie starts with a vowel, the pronoun je must drop its e and connect to the verb with an apostrophe.

Why is there an l' before espagnol when the English translation just says "Spanish"?

In French, you almost always need a definite article (the words for "the": le, la, l', or les) before a noun, and this includes the names of languages! Because the word espagnol starts with a vowel, the masculine article le shrinks down to l'.

Is it a typo that espagnol starts with a lowercase letter?

Not a typo! Unlike in English, the names of languages are never capitalized in French.

How would I say this if I were studying with a female friend?

You would say avec une amie. To talk about a female friend, you change the masculine un ami to the feminine une amie. Notice that you change the article and add an e to the end of the noun!