Can you imagine how terrible can he/she be? It is wrong! what you have to take into account is when you are gonna make a double question you have to ask like this: Can you imagine how terrible She is OR He is? This is an Indirect Question and we use it when we want to be polite and nice!

Nearly! It should be "Can you imagine how terrible he/she can be?" There's actually two questions here, which are "Can you imagine ...?" and "How terrible can he/she be?". When you nest the latter in the former, it becomes a reported question, and you have to invert the word order for those.