- I can without much difficulty understand what’s being said.
- I can without much difficulty to understand what’s being said.
Is #2 correct or not?
No, #2 is incorrect - you need a verb to go with “can”, not an infinitive. For instance, you could say “I can without much difficulty manage to understand what’s being said.”
Although #1 is possible, for me the natural word order is “I can understand what’s being said without much difficulty.”