Learn Italian: Mentre piegavo il metallo, lei ha infilato i cristalli. - While I was bending the metal, she strung the crystals.

No. The absolute past participle (like piegato il metallo) is used for an action that is completely finished before the main action starts. Here, the word mentre and the imperfect tense (piegavo) show that the bending was still ongoing at the exact same time she strung the crystals.

Why do we use the imperfetto for piegavo but the passato prossimo for ha infilato?

This is a classic combination of past tenses. The imperfetto (piegavo) sets the background scene by describing an ongoing, continuous action. The passato prossimo (ha infilato) describes a specific, completed event that happened in the foreground during that background action.

I thought infilare meant to put on clothes. Why does it mean strung here?

Infilare basically means to slip into or to insert. While you can use it for slipping on a jacket, it is also the standard verb for threading or stringing objects, such as slipping a thread or wire through beads or crystals.

Why is the pronoun lei explicitly used here when Italian usually drops subject pronouns?

Including lei strongly emphasizes the change in subjects between the two halves of the sentence. The first verb (piegavo) already tells us the subject is I, so adding lei before the second verb highlights the contrast between what the speaker was doing and what the other person was doing.