Which of the following is correct?

I asked them where John was.
I asked them where was John.

It seems that some people accept the second sentence as correct too. Is it right?

The first sentence is correct:

"¢ I asked them where John was.

The second sentence is not correct as it is. It could be:

I asked them, "Where was John?"

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In an indirect question, the normal word order in the clause with the question word is:

1): question word
2) subject
3) verb

Here are examples from Google. Note that it is possible to insert modifiers between these items, but the order of question, subject, verb is still the same:

"¢ Salamone
The ant asked him where he was going He told the ant what had happened, and said that he did not know where to go. ...
african.lss.wisc.edu/hscheub/salamone/story.htm –

"¢ chapter 4
When Iasked him where he was going, he told me that he is going to Czernowitz,... He took him in, asked him where he is going and when my father told him ...
migs.concordia.ca/memoirs/lecker/lecker_4.html –

"¢ New Bigfoot Video - Separating Fact From Fiction
I asked him specifically where this turnout was and he said it was going towards Lake Sonoma 15 minutes from highway 101. He said it was private land and he ...
http://www.rense.com/general69/bgft.htm -

"¢ Clarence Darrow Misquoted by Creationists
I asked him recently where it came from and whether he had intended it as a direct quote, as the transcript indicated, or merely a paraphrase. ...
http://www.talkorigins.org/faqs/darrow.html -

"¢ Libby and Perjury: Count Five of the Indictment - TalkLeft: The ...
Fitzgerald must have asked him directly where he first learned about Plame. If he lied about this, it would be pretty easy to prove. ...
talkleft.com/new_archives/012957.html –

"¢ The Hungry Stones and Other Stories, Rabindranath Tagore, 1916
They shook him, and questioned him, and asked him repeatedly where he had leftthe child; but all he could say was, that he knew nothing. ...
http://www.eldritchpress.org/rt/hungry.htm -

Rachel

Thank you for the reply. However, is it really incorrect to use normal question order in embedded questions? I found these examples from Goggle:

Again, I wondered where was the Muhammad that I had been taught.

I wondered where was the difference.

I asked them where was my refund of 108.99 and they told me ...

I also seem to remember that some grammar books discuss examples like those above too, but I'm not sure and I'm confused. Any more thoughts on the issue?

It is not actually "incorrect" to use normal question order in embedded questions, but it is noteworthy. In general, normal question word order is not used, but may be if the embedded question is long. Normal question word order is sometimes used regionally too.

R.W. Burchfield says this, in Fowler's Modern English Usage*:

'" A Comprehensive Grammar of the English Language (1985) distinguishes two main types of indirect questions: (a) wh-questions, e.g. I asked him when he would be 65 (equivalent to the direct question When will you be 65? ); such clauses are introduced by interrogative words beginning with wh- (where, whether, what who, why, etc., also how). (b) yes-no questions, e.g. She asked me whether I was coming now (equivalent to the direct question Are you coming now? she asked me). In both of these types, the order of words in the indirect questions fractionally differs from that of the equivalent direct questions (he would be > will you be; I was > Are you; i.e. the order of the auxiliary verb and pronoun is reversed.

Fowler (1926) noted that in some circumstances, adjusting the order of such elements in indirect questions produces unidiomatic ['abnormal] constructions. Consider the following:

A. How old are ?
B. Tell me how old you ar.e
of Tell me how old are you?
C. He wondered how old she wa.s
or He wondered how old was she
D. He doesn't know how old I am.
or He doesn't know how old am I?
E. How old I am is my affair.
or How old am I is my affair.

A is the direct question; in B, C, D, and E the first form contains the normal, and the second the abnormal form of the indirect question. Fowler correctly discouraged the use of the 'abnormal' forms, and then went on to cite some examples (presumably from newspapers) of the undesirable types: e.g. (Type D) It shows inferentially how powerless is that body to carry out any scheme of its own (normal order: how powerless that body is); (type E How bold is this attack may be judged from the fact that....(normal order How bold this attack is). Clearly it is important to have a 'feel' for the correct ordering of the elements in passages of indirect speech."
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While Fowler in 1926 is quite prescriptive, the authors of A Comprehensive Grammar of the English Language** are more descriptive about language today:

"Although the subordinate clause usually does not have subject-operator inversion, such inversion may occur, particularly when the clause functions as complement and the superordinate verb BE or when it functions as appositive:

The problem is who can we get to replace her.....

[1]In literary style, subject-verb inversion occasionally occurs when the wh- element is the subject complement or an obligatory adverbial, particularly if the subject is lengthy:

She told us how strong was her motivation to engage in research.
It took me some time to discover in which village stood the memorial to our fallen comrades.

[2]In addition, subject-moderator inversion is common in Irish English and dialectally:

Whenever I see her, she asks when will I be visiting
her mother..."
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The first example sentence – "Again, I wondered where was the Muhammad that I had been taught" -- is an example of description [1] above. (The brackets are mine.)

When there is a long modifying phrase or clause in the sentence, it is sometimes placed right after the word it modifies. In this sentence, that clause is "that I had been taught." The sentence is actually clearer when the verb – "was" in this case – does not separate the subject from its modifying clause.

Here is an example from the New York Times Archive (the only example of "wondered where was" since 1928):

A stunned viewer might have wondered where was the long-promised V-chip?
June 1, 1997``
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The second example sentence -- I wondered where was the difference."”fits the broad category of description [2] above.

Here is an example of "wondered where was" (one of 559, but many including direct speech) from Google:

A SHONEY'S MORNING
So, I wondered, where was the rest of this film shot? The next location I found
was the site of Fort William Henry and Lake George. ...
http://www.mohicanpress.com/shoneys_morning.html
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The third example sentence -- I asked them where was my refund of 108.99 and they told me -- fits both descriptions.
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The Longman Grammar of Spoken and Written English*** has several pages of patterns of word order in indirect speech. This entry is relevant to our discussion:

"Dependent interrogative clauses are normally introduced by a wh-word, and regularly have ordinary subject-verb order ...A more informal alternative...is found in colloquial English:

One lady thought we were turfing – and she said could we turf the lawn for her. (CONVERSATION)

And she said would we like these shirts. (CONVERSATION)

And then he said try it again and she rang and she asked, she said had the cheques come. (CONVERSATION)

The young man who had seen Mac in Westmoreland Street asked was it true that Mac had won a bet over a billiard match (FICTION)

She needed a backing guitarist and asked Kieran, who she had met once or twice on the road, would he help out. (NEWS)

This pattern represents a compromise between direct and indirect speech. It preserves the subject-operator inversion of the independent interrogative clause...."
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Finally, The Grammar Book **** states:

"The rule of non-inversion in embedded questions, which is standard, is complicated by the fact that speakers of some ethnic dialects...and of some regional dialects ...often invert subject and operator in embedded wh-questions as they would in unembedded questions:

? She asked where was I going.
?They asked what was the time.

Further research is needed to show the extent of such inversion and whether or not there are pragmatic factors such as length of the embedded question that help explain the environments in which inversion most often occurs."

Rachel
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*Fowler's Modern English Usage, by R.W. Burchfeld. Revised Third Edition. Oxford University Press. 1998
**A Comprehensive Grammar of the English Language, by Quirk et al. Longman. 1985
***Longman Grammar of Spoken and Written English, by Doublas Biber et al. Longman. 1999
****The Grammar Book, Second Edition, by Marianne Celce-Murcia and Diane Larsen-Freeman. Heinle & Heinle. 1999