"Both sound OK to me and seem pretty interchangeable. Under which circumstances would you use one in preference to the other?"

"I was sitting there" may describe a longer action during which a shorter action could take place, often accompanied by "while" or "when", e.g. "I was sitting there when the burglar came in", or "The burglar came in while I was sitting there". (Combined past continuous and past simple). If you said "I sat there when the burglar came in", that would indicate that the burglar came in and then you sat down!

"I sat there" (past simple) often describes an isolated action or one in a sequence, e.g. "I walked into the room, took my wig off and sat there".

I know that's only the tip of the iceberg, but I hope it makes sense (despite the rather silly examples!).