You can look at the answers here for more general considerations, but as to your particular question:
So, when Im referring to a process from the past, such as in the dialogue “What were you doing - I was sleeping” would it be Eu dormia, Eu estava dormindo or Eu [dormi].
The response goes hand in hand with the question, that is, the same tense tends to be used in both. So we should first explore our options for the question. What were you doing? can be translated in two ways (I'm using estar a fazer and estar fazendo interchangeably):
Que estavas fazendo/a fazer?
Estava lavando/a lavar a roupa.
There needs to be a past temporal reference here, either implied or explicit (such as agora mesmo or nessa altura / quando ela chegou). The meaning is that at the reference time (which is more commonly a point in time, but can also be an interval), the action in question was ongoing. It likely started before the time of reference and continued after it.
Another, less likely, option is:
Que estiveste fazendo/a fazer?
Estive lavando/a lavar a roupa.
In this case, there is also a time of reference in the past, but it's an interval, and the action is restricted to that interval. It ended past that interval.
If the interval of reference is starting somewhere in the past and ending recently, this could be translated by what have you been doing (though perhaps que tens estado fazendo/a fazer is a better translation for the more likely interpretation of that English sentence). The difference between estava and estive for an implicit recent time reference is that estava is the only one for which this reference can be just now. Say you surprise someone and see them hiding something or looking suspicious. You'd ask que estavas fazendo?. OTOH, if you see a kid with dirt all over, but you don't know exactly when the corresponding activity took place, you'd ask que estiveste fazendo?.
If the question is what were you doing yesterday the whole day?, then, que estiveste fazendo/a fazer ontem o dia todo? is a possible translation, but not que tens estado a fazer ontem o dia todo, nor que estavas a fazer ontem o dia todo.
Finally, the imperfect can also be used to express the same temporal relationships as the progressive past, but this is less common or borderline impossible with eventive predicates (esp. without temporal adjuncts). Que fazias? to mean what were you doing just now? is not an option; que fazias no sótão às três da manhã? is OK, with only subtle changes in meaning from que estavas a fazer. However, like in English, for certain stative predicates the past continuous cannot be used:
Tinha seis anos quando o conheci. (not estava tendo)