'English' (as in language) is not a quantifiable noun.
You can't use an or the, which are articles used to refer to quantifiables with a non-quantifiable noun. Saying 'the English' or 'an English' (referring to the language itself in a general way, and not referring to a particular English) is just as wrong as saying 'the tea' or 'a sugar'. For these cases, the correct phrases would be 'the cup of tea' or 'a kilo of sugar', being 'cup' and 'kilo' the nouns you are using the articles with. Examples and further explanation on this can be found here.
However, if you'd like to use the, you can say 'the English language' but note that you are using the word as an adjective rather than a noun here, and that 'the' is referring to 'language' rather than to 'English'.
To particularly answer your question, the correct option is "Do you understand English?" and both of the others are wrong.
Hope this clarifies things for you.