The first one is correct in formal and informal contexts. The second sentence would not be used by a native speaker.
The reason is that there is a difference in the way that English handles wh-words, when they are in the main clause vs. when they are in the embedded clause. The structure also depends on whether the wh-word is the subject or the object in its clause.
In the main clause, we use the basic order:
wh-word verb ______
Where is the best place to ask this question?
This is true when the wh-word is the subject or the object, although you'll notice we use do-support when the wh-word is the object (when the main verb is not is):
- Who told you that? (who is the subject, no do-support)
- Who did you tell? (who is the object, use do-support)
When the wh-word is inside of an embedded clause, the verb doesn't move to the front of the clause; only the wh-word moves. For example:
- I was wondering [who told you]? (corresponds to "who told you?" in main clause)
- I was wondering [who you told]? (corresponds to "who did you tell?" in main clause)
(In other languages, this pattern is not the same; it is an arbitrary feature of English.)
Since where is the object in this case (and usually is in general), it follows the second pattern, so: "I do not know where ... is".