The two sentences are a bit different and I will try to explain as I understand it.
Would (auxiliary verb, past of WILL) is used to
unreal, possible or hypothetical situations, this verb is more
imaginative, also it cannot be the main verb alone:
I would love to visit London. (a hypothetic situation)
Would you take my hand, please? (a polite request)
I'd suggest you to write it. (a polite request/an advice) [I'd = I would]
Were -ing (past continuous of BE) is used to situations which
were happening at a special time in the past and none hypothetical, it is
more direct, not imaginative. It's used to say "it happened while...", "it was happening". These sentences below are directs, they aren't polites (because more direct):
You were loving to visit London. (an emotion while you visited London, not anymore)
Were you taking my hand? (an action while something, yes or no question)
I was suggesting you to write it. (a request at a defined time)
In your sentence, you begin with the verb "thought" (past of THINK) which means you did not sure about what happened but you were elaborating a theory while he did not get your call:
He was passing through... // situation while he did not get your call
Otherwise, you said: maybe you did not have your cellphone in your hand, you had not enough battery, you lost your phone... - imaginative, polite:
He would be passing through... // perhaps; this situation possible among others
Therefore, you should use were -ing because while he didn't answer you thought that and it's a friend, then maybe you can avoid the polite form. Also, I think the correct sentence might be:
I called you but you didn't take my call. I thought you were passing through a tunnel.
I hope that I didn't forget something and this helps you to better understand the little difference between these two forms.