Te está tomando

[Tyrn]

Hi,

No, Richie’s just pulling your leg.

No. Richie te está tomando el pelo.

How am I supposed to translate this expression literally?

[Rusty]

tomarle el pelo a alguien = to pull someone's leg

This is an idiomatic expression in both Spanish and English. Is Spanish, it's someone's hair or beard that's being pulled. In English, it's somebody's leg.
Both mean to deceive, play a joke on, or fool, someone (engañarlo/a).

During conjugation, the reflexive pronoun is removed from the infinitive and placed before the verb, where its role is an indirect object pronoun. The pronoun must agree in person (and number) with the person whose leg is (persons whose legs are) being pulled.

The verb in question is a progressive form of the verb.

[Tyrn]

What about the verb tomar? Does it really mean to pull in the context in question?

[Rusty]

The verb tomar should be translated as 'to grab' when used in this context.
I used 'pull' because of the English idiom usage.