The formula is the better option (placing verb after subject). On another note, the word "much" is unneeded because "detailed" is a standard adjective, rather than comparative, noun, etc. You could say e.g. "how much more detailed" but not "how much detailed".

So, final sentence: "How detailed will the life simulation of citizens and their demands be?"

The thing is, what your friend suggested might sometimes be acceptable, but slightly dated/literary, depending on the verb.
"How fared it with him, then?"