"What are you doing with that?"
Translation:Wat doe je daarmee?
It's simply not used, probably because we have daarmee. :) Similar sentences like Wat doe je met mij? (What are you doing with me?) or Wat doe je met dat voorwerp? (What are you doing with that object?) are used.
I don't know the rules but usually when you say "wat doe je met dat" you stick the object behind it.
"Wat doe je met dat ding?"
"Wat doe je met die vrouw?"
"Wat doe je met dat dier?"
Plainly saying "wat doe je met dat?" I think is incorrect or at least sounds very weird in a lot of cases.
Daarop can also be translated as on that, though it may depend on the context and the word order might have to be considered as it does not always work to translate it word for word.