。
She was wearing a lot of lipstick.
Literal
She [topic-は] lipstick [object-を] lots was-applying.
口紅をつける ('apply lipstick') uses the versatile verb つける ('attach, apply, put on') for cosmetics — same family of meanings as 香水をつける ('apply perfume') or 化粧をつける. 口紅 ('lipstick') is a native Japanese compound: 口 ('mouth') + 紅 ('red, crimson'). たくさん modifies the verb adverbially without a particle. Past progressive ~ていた describes an observed scene: she was, at that moment, in the state of having lipstick applied (and a lot of it).