Neither one is correct.
#1 should be 'Where did Janet sit?' The interrogative form of the Simple Past puts the helping verb 'do' into the past tense, while the main verb remains in the base form.
#2 could be 'Where was Janet sitting', if you want to use the Past Progressive. Again, the 'be' verb is put into the past, while you use the present participle of your main verb.
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