Is what happened considered an act of disbelief (kufr), and is prayer valid under those circumstances?

If whispers (waswas) overcome you, you must strive against them and endeavor to rid yourself of them. You will be rewarded for this, God willing, and you have not departed from Islam. You must repel every whisper that deludes you otherwise, for your Islam is firmly established with certainty and is not removed by doubt. Your ablution (wudu) and prayers (salat) are valid, and you are not required to repeat them. Your hesitation in interrupting the prayer does not invalidate it according to many scholars. You may adopt the easiest opinion as long as you are afflicted by whispers.