Although technically it isnt correct, native speakers will say it this way 99% of the time, just as a native english speaker might say "what you doing" instead of "what ARE you doing"
I'd guess its one of the top 5 most common phrases in bahasa along with lagi apa and apa kabar
Thats why its in here - because you still need to understand it for when a native speaker inevitably says it to you!
that's not possible. your sentence sounds like saying "are you medium/average/mediocre" sedang acts as an adjective.
The best transliteration for "What are you doing" is "apa yang(what that), kamu(you), sedang lakukan (currently do?)".
the best transliteration for "kamu sedang apa?" is " you in the process of what?" this translation that duo gives is more colloquial.