The way Debra pictured it, Ray had longer hair and was playing disco music on the radio. And she pictured Lisa to be some gorgeous girl...when in fact she was a bit nerdy in "real life".
Debra imagined her being all giggly and bubbly. Ray and Lisa talked about being in the same Spanish class and speaking Spanish to each other in the car. Then they were all over each other.
Debra's hallucination was interrupted when Ally started talking to her.
The entire hallucination was seen in Season 1, Episode 15 "The Car".