Word order for subordinate questions

I know subordinate questions have no inversion. Should this sentence:

"Do you know what are the good things to do around here?"

be

1. "Do you know what the good things are to do around here?"

MS Word's grammar check gives me,

2. "Do you know what the good things to do around here are?"

But at least to my ear, the first seems the one most commonly said. Is the first one wrong? Which one is the best?

1. Do you know what the good things are [to do around here]?"
2. Do you know what the good things to do around here are?"

The Original Poster's second example (#2 above) might be considered to be the canonical version of the sentence. This is the version where all the phrases are in their normal positions. The embedded interrogative clause in the sentence is this section here:

• what the good things to do around here are.

Let's analyse the grammatical relations here. The verb in this subordinate clause is the word are. This verb has a Complement, the word what and a Subject, the noun phrase:

• the good things to do around here

We can portray the clause like this:

• [what] [the good things to do around here] [are]

This is the structure we would expect to see for an embedded question like this. The wh--word has been moved to the front of the clause, and the Subject and the verb appear in their normal order.

However, this sentence is a bit unwieldy. The reason is that it has a very long Subject and a very small verb phrase. When we get sentences like this in English, we often use extraposition from noun phrase movement. This just means that we can move part of the noun phrase from its normal position and put it at the end of the clause. Here the head noun in the noun phrase is the word things. Everything that occurs after the word things is POSTMODIFYING the noun. It is these postmodifying phrases that we can move to the end of the clause. In this case the postmodifying phrase is to do around here. If we put this phrase at the end of the clause we get the Original Poster's sentence (#1):

• Do you know what the good things are [to do around here]?"

The Original Poster is correct that this is the most natural of the two sentences. The subject in the first sentence is just too long, considering the very short verb phrase.

Here are some more examples of extrapositions from noun phrases:

• An inspector arrived from Customs and Excise. (extraposition)
• An inspector from Customs and Excise arrived. (canonical sentence)
• The day came when he was old enough to leave home. (extraposition)
• The day when he was old enough to leave home came. (canonical sentence)