Complete the following sentence by selecting the most appropriate opt…

The correct answer is Option (3) → were doing; called

Past continuous with simple past (an action interrupted):

• When a longer action was going on and a shorter action happened in the middle of it:
  • the longer action takes the past continuous (was/were + -ing);
  • the shorter action takes the simple past.
• Clue words: "when" and "yesterday evening". This sentence: the speaker called "yesterday evening" while the listener was busy with something, so "what you were doing when I called you".
  Complete sentence: Please tell me what you were doing when I called you yesterday evening.
  Example: The lights went out while we were having dinner.

Why the Other Options are Incorrect?

Option 1: did; called — Incorrect. "What you did when I called" asks what the listener did after the call, in response to it, not what he was busy with at that moment.

Option 2: do; call — Incorrect. The present tense forms do not fit "yesterday evening".

Option 4: done; was calling — Incorrect.

• The past participle "done" cannot stand without a helping verb (have/had).
• It turns the roles round: the short action, the call, is put in the continuous form.

Contrast: the longer action in progress takes the past continuous (were doing); the shorter action that interrupts it takes the simple past (called).