Emphatic usage: stress/emphasize the word
Max: Who's the most popular player?
Sam: I don't know. What about you Pat? Do you know?
Pat: Sorry. I wasn't listening. Did you ask me who knows the most popular player?
Sam: No. I asked, "Do you know who is the most popular player?"
The second one, Do you know who the most popular player is? is perfectly modern English. Most speakers contract the subject-verb in spoken English: Do you know who's the most popular play? however, conservatives would have you not end the sentence with the verb is.
I don't think 1) is natural English. If someone wanted to emphasize "is," they would omit the "do you know" in the following way: Who is the most popular player?
The second sentence is completely natural and correct. It's normal not to invert the subject and verb of a question after "Do you know" which is itself an interrogative inversion. In fact, it's incorrect to make any further inversions in the same question.