The correct answer to Q1 is B.
'I thought you were coming to the party'.
Why the past continuous? Because it's based on the use of the present continuous to indicate an intention.
If you are intending to come to someone's party in the future, you would say 'I am coming to the party'.
When this is reported in a sentence starting in the past tense 'I thought...', this present continuous phrase goes into the past continuous. It works like reported speech.
For example:
'I am coming to the party', you said. -----> You said you were coming to the party.
-----> 'I thought you were coming to the party
I hope that makes sense.