In an interview, I was asked about about my experiences in developing in team settings. However, I've been self taught and have only worked on projects on my own. How would you go about answering this question? I just brought up school clubs and how I was able to play well with others, but this isn't really developer related.
You should always be open and honest with those that are interviewing you. Seasoned interviewers can smell smoke from a mile away.
This type of question gives you a peek inside the organization. In this case they are telling you to expect a team environment and now is the time to discuss a few points; first, do you desire to work in a team environment; second, can you work in a team environment; lastly, what have you learned from previous team experiences.
Telling them that you haven't been exposed to an environment that works in teams isn't a deal breaker and should lead to a discussion that relates to non-professional team experiences you have had, much like you told them about.
I, as others have pointed out, would say that you answered the question perfectly.
Telling the truth is the best option, and saying what you've said isn't a bad thing to do. But think about what the truth really is -- think about analogous situations and talk about those, and think about what you know about your deficiencies and talk about those. Not all companies will care about your well-thought-out and reasoned answer that really says "I have no experience in that" but many will.
I used to teach a course in university that was primarily about communicating the skills of a new graduate (in business and engineering fields, typically) to the HR folks who would be looking at their resume and trying to decide to hire them or not. What I would tell students is that everything counts when you're entry level or junior level. If your only teamwork experience is a year of working with three people on a senior project, in whatever field it may be, talk about it: what you did, what you learned, and how that matches up with what they're asking. When we practiced mock interview questions, I stressed that the answer is often not nearly as important as how you got to the answer.
So, think about your answers without worrying that they're not developer related, if you don't have experience like that, and worry about how they could be -- more specifically, how you could be the developer that they want. That will mean answering honestly and showing what you might perceive to be a shortcoming, but if you add to it a thoughtful sentence or two about how you see yourself in the future, fitting in on a team, playing nice with others, working in an Agile (or other development methodology) environment, that will be to your benefit.
Bring up the most relevant experiences that you have that address the question. If you've never worked on a development team before, don't make things up. Look at other organizations, teams, and groups that you've been a part of and discuss times that you needed to collaborate with others to solve some kind of problem. You can talk about different problems that arose and how you interacted with the team to solve them.
Skills such as leadership and teamwork generally translate well between different applications. If you understand how to work well with a team in one context, it might not be a perfect fit, but you can probably adapt well to other contexts. Map various skills and abilities that you have to the context of the organization and job that you are interviewing with.
Be honest about your weaknesses. When asked go into detail about how you intend to improve on those weakenesses (in your case working more as a team).
A candidate who has apraised himself, identified his weaknesses and is actively working to improve on them is often better than somone who dosent have any weaknesses (ie they do but just dont know them).
Just tell the truth, exactly what you've told us. Being able to tell the truth instead of a perceived "right way to answer" is a sign of emotional intelligence and HR people look for that. I recently had an interview where I was asked "how well do you deal with pressure?". I simply answered that I don't know since I haven't been put in a very high pressure situation yet, and they were happy with my answer (I did get the job and their interview process was not without rigour).
Let them know that working on your own wasn't just by choice and that you are interested in working within a team. Be upfront about what you see as the good and the bad. I think he biggest concern is are you going to get along with others. Some programmers don't and prefer to work alone.