的确这个句子是错误的。应该改为：

Eventually, the couple found that their bodies turned for the better, with re-found strong muscles that they thought they had lost forever. 

Eventually, the couple found that their bodies turned for the better, with re-found strong muscles that they thought had been lost forever. 

这个定语从句中的they thought是不能用插入语解释的。去掉they thought定语从句就成了逻辑错误，因为forever意味着已经永远失去的强健肌肉。既然已经永远失去，那就是不可能重新找回的。所以they thought是定语从句的主句，他们原以为他们已经永远失去的强健肌肉。

当这个从句为that they thought had been lost forever时，that还可以省略：

Eventually, the couple found that their bodies turned for the better, with re-found strong muscles they thought had been lost forever. 

所以，这个句子从that可以省略，从省略了they thought后定语从句逻辑不通这两方面都证明了将they thought分析为插入语的弊端。再加上插入语为独立成分，需要与句子其它部分用逗号隔开。

所以我强烈建议英语学习者摈弃插入语这种貌似简单，但却常会导致误解的分析方法，而采纳嵌入式定语从句的观点，即定语从句本身是个主从复合句，关系代词在从句中作成分。

Eventually, the couple found that their bodies turned for the better, with re-found strong muscles that they thought had lost forever. 

参考译文：最后，这对夫妇发现他们的身体变得更好了，重新找到了他们认为永远失去的强壮的肌肉。

with re-found strong muscles that they thought had lost forever

结构解析：介词with+名词+定语从句,that作定语从句中宾语从句的主语,定语从句中的宾语从句谓语动词had lost动作在宾语从句谓语动词thought动作之间发生，属于过去的过去所有用过去完成时态。