Learn French: Elle m'a dit que ce souvenir était terrible. - She told me that this memory was terrible.

Because the reporting verb (a dit) is in the past, the second half of the sentence follows backshifting rules. Her original words might have been in the present tense (« Ce souvenir est terrible »), which shifts to the imparfait (était). But if she originally used the imparfait (« Ce souvenir était terrible »), it doesn't shift at all! The imparfait remains unchanged in reported speech.

If she originally said « Ce souvenir a été terrible » (passé composé), how would this sentence change?

It would become Elle m'a dit que ce souvenir avait été terrible. When the reporting verb is in the past, an original quote in the passé composé must step further back in time to the plus-que-parfait (avait été).

Why use souvenir instead of mémoire for "memory"?

Un souvenir refers to a specific recollection, like a childhood memory or a thought about a past event. La mémoire, on the other hand, refers to the biological capacity to remember things (like "having a good memory") or computer memory. Here, she's talking about a specific recollection.

Does terrible carry the exact same meaning in French as it does in English?