Which phrase is incorrect in the following sentence? As I was passing my friend's house last night, I was seeing that she had a new car packed in her driveway.

The phrase "was seeing" is considered incorrect in this context due to the nature of the verb "see." In English, "see" is a stative verb, which describes a state or condition rather than an action that progresses over time. Stative verbs typically do not use the continuous form (e.g., "was seeing") when discussing perceptions or experiences. Instead, it should simply be in the simple past tense: "saw." Therefore, the correct way to phrase that part of the sentence would be "I saw that she had a new car," which conveys the situation more accurately and appropriately. This aligns with how we typically express perceptions in English, using simple rather than continuous forms with stative verbs.