The sentence is grammatically correct but not idiomatic.
Firstly: Yes, misunderstand is perfectly acceptable in a formal text.
However, the use of the past continuous is very non-idiomatic here. We normally use a continuous tense to mean something like "to be in the middle of performing an ongoing action". But "misunderstanding" is not really an action you can be in the middle of doing.
For example, this would be idiomatic:
Every time the teacher called on me, I was daydreaming about baseball.
"was daydreaming" makes sense because to daydream could be a lengthy action that you were in the middle of when the teacher called on you. But "to misunderstand" is not something that you were in the middle of doing when the teacher was teaching the lesson. So
...I misunderstood some notable points.
is much more fluent. Actually, to be even more fluent, the beginning of the sentence should be
Any time my teacher taught a lesson...
because we're talking about a recurring or regular action (your teacher teaches a lesson and you misunderstand) and not something that happened in the middle of your teacher being in the action of teaching.