Laetus,a,um is an adjective, so it will change in form to match the case/number/gender of the noun it goes with. In your first example, it matches with Lydia (and it's not just a coincidence that they're next to eachother). Lydia is ablative because it goes with the preposition "a," so "laeta" is also ablative. Thus, "The words of Medus are heard by a happy Lydia."
Don't rely on resemblence of endings alone. Verba ends with an A because it's a neuter plural (verbum, verbi, n.), and could thus be nom or acc plural. Lydia is feminine, so that long A has nothing in common. Ideally you'd have a macron over that A to help you tell them apart, but macrons are rare.
This should help you figure out the second example. "Lydia is pleased with the words of Medus and [she] greets him." Once you know that "words" here is ablative, you'll have to deduce the reason for this case. Here (as often) it's because the words are instrumental--you are delighted with or by something.
Horae quidem cedunt et dies et menses et anni, nec praeteritum tempus umquam revertitur nec quid sequatur sciri potest. Quod cuique temporis ad vivendum datur, eo debet esse contentus. --Cicero, De Senectute