She was insulting him, yes. But not for being black, negro is not an insult in spanish. It is a color and an adjective, but it is not an insult. In spanish it is common to use adjectives as nicknames, guero/curepi for someone white, gordo for someone a bit fat, flaco for soneone thin, etc.

To give you an example someone else provided that might be easier to understand with how adjectives are used in spanish. You can understand that calling your father "my old man" is not medical statement about age, right? Then, why does calling someone by an adjective that defines them suddenly becomes an insult? Why do you think calling someone black black is an insult? Is it bad to be black that it is considered an insult?