"What does she look like?" is correct. This is to enquire about the general appearance of a person, for example her eye colour, her height, what type of clothes she wears, etc.
The other sentence is incorrect.
You can say "How does she look?" Which normally we use to ask about the well-being of a person. For example, does she look sick, or does she look well.
What does she look like?
She looks like a queen living in a palace.
How does she look like?
She looks very terrible since last time she split up with that man.