Core issue
The show module command output shows the status as bypass because the diagnostic level is configured as bypass for some reason.
Resolution
The default diagnostic mode is minimal, whether the software is Catalyst OS (CatOS) or Cisco IOS . The switch must be configured as diagnostic level bypass. This level skips all tests during bootup.
The show module command shows bypass as the status.
In order to fix this problem, issue the set test diaglevel {complete|minimal|bypass} command on the switch running CatOS to set the diagnostic level to minimal.
Issue the switch(config)# diagnostic level {complete|minimal|bypass} command in order to set the diagnostic level to minimal on Cisco Catalyst switches running Cisco IOS.
This way, the bootup does not take as long as when the diagnostic level is set to complete, but hardware problems are still detected on the card.