You asked about how much grammar and vocabulary to cover; my suggestion is that you give some vocabulary and grammar input. As the students are not very open to speaking, you can create spoken activities that give controlled practice of the language you’ve presented. As they gain confidence and their language improves, you can move to less controlled speaking practice. Try to keep presentations of language short and present language which relates to whatever the conversation topic is. If you think it is possible, find out what they are studying in their writing classes and link it to that.
As for mixed ability, there are two major opinions; the first is that you put the students into groups according to their level (strongest students together, weakest students together etc) and the other is that you organise group work with a mixture of stronger and weaker students in each group. I suggest you start by organising group work according to level. Give students the same topics to discuss otherwise you’ll spend too much time preparing different exercises. You can set the same speaking task for the stronger students and add tasks such as using 6 items of new vocabulary in their conversation, or using a certain tense (e.g. present perfect continuous) at least twice. From time to time, you can organise groups with various levels in the groups so that students don’t get into the habit of always working with the same people.
One key to keeping the students interested is to involve them as much as possible in decision making. For example, ask them which topics they would like to talk about; which language points they would like to review. Give them ownership of what happens in the classroom as much as possible.
You can also take a look at the following links where I answer questions related to your situation:
If you’d like more ideas, please feel free to write in again.
All the best,