This is a question of [valency](http://en.wikipedia.org/wiki/Valency_(linguistics)):

> In linguistics, **verb valency** or **valence** refers to the number of arguments controlled by a verbal predicate. It is related, though not identical, to verb transitivity, which counts only object arguments of the verbal predicate. Verb valency, on the other hand, includes all arguments, including the subject of the verb.

Simply put, the valency of a verb is the number of arguments (most commonly subject, direct object, indirect object, and prepositional object) a given verb can take.

An _intransitive_ verb has a valency of one: it can only take a subject.  
A _transitive_ verb has a valency of two: it can take a subject and a direct object.  
A _ditransitive_ verb has a valency of three: it can take a subject, a direct object, and a third argument which is usually a direct object or sometimes a prepositional phrase.

When a verb is passivised (made passive), like _he was thought_ in your example here, its valency is reduced by one. Passivising verbs _removes the subject argument_ and one of the other verbal arguments in the sentence takes its place instead. If the subject must still be expressed, it is put into a prepositional phrase headed by the preposition _by_.

Since a subject of some kind is mandatory in English, this means that when the subject is removed, there _must_ be another argument that can take its place, so intransitive verbs (which have no other arguments available) cannot be passivised.

For example:

> He<sub>S</sub> sleeps. --> †Is slept. (Intransitive; cannot be passivised)  
He<sub>S</sub> saw them<sub>DO</sub>. --> They were seen [by him] (Monotransitive)  
He<sub>S</sub> gave her<sub>IO</sub> a flower<sub>DO</sub>. --> She was given a flower [by him] // A flower was given (to) her [by him].

<sub>S</sub> = subject; <sub>DO</sub> = direct object; <sub>IO</sub> = indirect object; † = ungrammatical construction

Now, the verb _think_ is rather restricted in usage. It can be an intransitive verb (“I think, therefore I am”) or a transitive verb, but for it to make sense as a transitive verb, one of three requirements must be fulfilled:

 - The object is something that can be _thought_, like ideas, thoughts, etc. “He thinks deep thoughts” is perfectly fine, but “He thinks a house” is nonsense, because houses are not things that you can think.
 - The object is a clause, optionally headed off by the subordinator _that_: “He thinks [that] it’s going to rain”.
 - The object must have an [_object complement_](http://en.wikipedia.org/wiki/Complement_(linguistics)), and the meaning of _think_ is then ‘consider to be’ or ‘regard as’ (in this construction, you can add _to be_ before the object compliment with no change in meaning): “He thinks [= considers] himself<sub>DO</sub> [to be] a magician<sub>DO complement</sub>”.

In your case here, _he was thought_ is a passive construction: that means in the underlying active construction, _he_ is not the subject, but an object, direct or indirect. The real subject is not shown at all.

> Pharaoh was thought = _X_ thought him

As you can see, this doesn’t fulfil any of the requirements above. There is a simple object _him_. This is neither something that can be considered an ‘idea/thought process’, nor a clause, nor an object with a complement. If we add the clause that comes after, it becomes even worse—there are now two direct objects, which is not possible without a coordinator (like _and_):

> _X_ thought Pharaoh [that] he was divine.

If we remove the first of these, it becomes perfectly valid:

> _X_ thought [that] he was divine.

You may also have noticed that _Pharaoh_ and _he_ refer to the same person here. So if we want to retain that we’re talking about Pharaoh, we can simply use _Pharaoh_ instead of _he_ once we’ve removed him from the sentence:

> _X_ thought [that] Pharaoh was divine.

So how do you make a sentence like this passive? Remember, making it passive means removing the subject (_X_) and turning another argument into the subject. There is only one other argument: _[that] Pharaoh was divine_. This can indeed be used as the subject, in which case the subordinator _that_ must be kept in and cannot be suppressed:

> That Pharaoh was divine was thought.

This is _possible_, but it is very odd-sounding. The normal way of making a passive construction when the argument that is to be used as the subject is a clause is by inserting a [dummy ‘it’](http://en.wikipedia.org/wiki/Dummy_pronoun#Raising_verbs) as the subject and then keeping the clause in its normal position after the verb:

> _It_ was thought [that] Pharaoh was divine.

This is a very normal and perfectly useful construction, and it is probably what was meant to be the correct construction in your example.

Alternatively, the intended version may have been one with an object complement (as in requirement no. 3 above). Complements are essentially like clauses, but they are not clauses: they are kind of ‘declausified clauses’, and they don’t have subjects. The simplest way to make a complement out of a clause is to replace the subject and finite verb form with a corresponding infinitive. If that infinitive is _to be_, you can leave it out entirely. Thus, _[that] he was divine_ becomes just _[to be] divine_ (the subordinator can only be present with an actual clause, not with a complement).

Thus, the original (active) version:

> _X_ thought Pharaoh [that] he was divine.

– can be fixed if we turn the clause into a non-clause by substituting _[that] he was_ with _to be_, or leave it out altogether:

> _X_ thought Pharaoh [to be] divine.

This is made passive in a perfectly regular way—since there is no clause, there is no need for a dummy ‘it’:

> Pharaoh was thought [to be] divine.