"How many people do live there" is technically correct, but old-fashioned. You could still use it today to stress that you want to know exactly how many people live there.
For example:
If you said "I think 5 people live there" and someone said, "No, that's wrong"
You could ask "Well, how many people DO live there?" By stressing the 'do', you are implying that you want to know an exact number.