#2 can be fixed in many ways: "Why is it that so many children were working in the streets?" "Why? So many children were working in the streets." "So many children were working in the streets. Why?" #1 is good.

I think she said it that way because sometimes people aren't precise with grammar, especially in spoken language. She really has two separate sentences there, joined by a comma splice, and the sentences have different word order. 1. "I decided to study the reasons why children were working in the streets or [I think she really means "and"] why some children were being recruited by violent organizations." This is a declaratory sentence with one dependent clause in active voice (subject precedes verb) and one in passive (subject of the sentence is object of verb and precedes it.) 2. "Why were so many children suffering from chronic malnutrition?" This is actually a question, so the verb comes first. I hope that helps!

I think the second sentence is the correct one👌

I'm not sure of the exact explanation, but: 1 Is a completely normal/correct question. 2. Is not a normal/correct question, and possibly not even a complete sentence all by itself. However it would be totally normal/correct if proceeded by a clause such as: She wanted to know why so many children were working in the street. So, to summarize/rephrase: 1 is a questions; 2 is a clause and could be part of a question, but is not a correct question by itself.