For the function $f(x)$ to be continuous at $x=0$, the limit of the function as $x$ approaches 0 must exist and be equal to the value defined at $x=0$, which is $k$.
Step 1: Continuous at $x=0 \implies \lim_{x \to 0} f(x) = f(0)$.
Therefore, $k = \lim_{x \to 0} \frac{\log_e(1 + \frac{x}{a}) - \log_e(1 - \frac{x}{b})}{x}$.
Step 2: We use the fundamental limit: $\lim_{u \to 0} \frac{\log_e(1 + u)}{u} = 1$.
We rewrite the expression as two separate limits:
$k = \lim_{x \to 0} \frac{\log_e(1 + \frac{x}{a})}{x} - \lim_{x \to 0} \frac{\log_e(1 - \frac{x}{b})}{x}$.
Step 3: For the first term, multiply and divide by $a$:
$\lim_{x \to 0} \frac{\log_e(1 + \frac{x}{a})}{\frac{x}{a} \cdot a} = \frac{1}{a} \cdot \lim_{\frac{x}{a} \to 0} \frac{\log_e(1 + \frac{x}{a})}{\frac{x}{a}} = \frac{1}{a} \cdot 1 = \frac{1}{a}$.
For the second term, multiply and divide by $-b$:
$\lim_{x \to 0} \frac{\log_e(1 - \frac{x}{b})}{\frac{x}{-b} \cdot (-b)} = -\frac{1}{b} \cdot \lim_{\frac{-x}{b} \to 0} \frac{\log_e(1 - \frac{x}{b})}{-\frac{x}{b}} = -\frac{1}{b} \cdot 1 = -\frac{1}{b}$.
Step 4: $k = \frac{1}{a} - (-\frac{1}{b}) = \frac{1}{a} + \frac{1}{b}$.
The correct value of $k$ is $\frac{1}{a} + \frac{1}{b}$, matching Option (3).