Learn Portuguese (Portugal): Eu converso com o meu amigo.

In European Portuguese, it is standard to put a definite article (like o for masculine or a for feminine) before possessive words like meu (my). So literally, you are saying 'with the my friend'.

Could I use the verb falar here instead of conversar?

Yes, you could say Eu falo com o meu amigo, which means 'I talk with my friend'. The verb conversar specifically means 'to chat' or 'to have a conversation', which emphasizes a two-way interaction more than falar does.

Does the preposition com combine with the article o here, similar to how de combines to make do?

No, it stays separate. Unlike the preposition de (which you have seen merge with o to become do), the preposition com (with) does not merge with the definite articles o or a. You write them as two separate words: com o.

Do I have to include the word Eu at the beginning of the sentence?

No, it is optional. Because the verb form converso only ever goes with Eu (I), the subject is already obvious. Dropping the pronoun and just saying Converso com o meu amigo is very common and sounds perfectly natural.