The difference between these two is subtle, as you're right - they're fairly similar.
I would imagine myself doing this.
This sentence refers to an event happening in the past (likely multiple times) at a non-specific time. Basically, all we know is that it happened (multiple times), but we don't know when it started or when it finished.
This is the imperfect tense, which you can read about here.
I imagined myself doing this.
This is much more likely to be referencing a specific event. For example, I could say:
When I turned 8, I imagined myself becoming an astronaut!
At the specific time when you turned 8, you imagined that you would become an astronaut. It's a one-time event with a concrete starting and ending point.
This is regular preterite.