The correct question is _______
Do you know where does he live?
Do you know where he lives?
Correct
Do you know where lives he?
Do you know where does he lives?
Explanation:
Correct Answer is: Do you know where he lives?
Cause, There`s is a rule that you must have to use auxiliary verb after W/h word(interrogative pronoun).
Example:Where does he live?
But there is a another rule that if the w/h word(interrogative pronoun)is replaced in the middle of a sentence you don`t have to use aux. verb after that . In this case,the rule will be w/h word+sub+verb.
Example:Do you know where he lives?