placement of descriptive clause in the sentence?

S1 is ambiguous, it's not clear whether the unsavory practice or X limits growth. S2 makes it more clear that "which limits growth" applies to the unsavory practice.

BTW, is the X in "X can be done" the same as the X in "by X"?

I think that the best way to make the sentences more readable is to do some serious revamping. For example, in the "unsavory practice of Y" example, I would try to reduce the number of contending clauses that I had to try to put into order. To that end, I would probably express Y as a possessive and rephrase the "which limits growth" clause as an adjective. As is often the case, framing the sentence in active voice also contributes significantly to a less-contorted syntax:

To handle Y's unsavory, growth-limiting practice, you [or one] can do X.

or

To handle Y's unsavory, growth-limiting practice, do X.

To deal with the "John and his brothers" example, I would start by identifying how many brothers my readers were going to have to contend with, and then I'd see what further arrangement of the factual details yielded the most natural-sounding sentence:

John grew up with two brothers: one who worked in construction, and one who worked in government but suffered from poor health.

In both instances, the main problem with the original versions (in their various permutations) is that they have too many clauses growing every which way, like suckers on an untended tomato plant, leaving you with complicated hierarchical associations that you can't organize satisfactorily merely by amping up your punctuation or rearranging the clauses.

S1. X can be done to handle the unsavory practice by Y, which limits growth.

S2. X can be done to handle the unsavory practice, which limits growth, by Y.

Apparently, Y is involved in some unsavory practice that has the effect of limiting growth, calling for X to manage the problem.

• X can be done to handle the unsavory practice by Y which limits growth.

As I understand it: by Y and which limits growth are both being used as adjective phrase modifiers for "the unsavory practice".

It's stylistically efficient to keep the subject X together with the verb phrase can be done to handle and the direct object the unsavory practice. Thereafter, the two phrases by Y and which limits growth serving as object complements are allowed to flow as their function is to further modify practice. Writing it the way I've shown in my example above preserves the original verbiage of S1, and in that case requires no commas. Also consider:

• X can be done to handle Y's unsavory, growth limiting practice.

John grew up with a brother who worked in construction and was John's only healthy sibling, and another brother who worked in government.

John grew up with a brother, John's only healthy sibling, who worked in construction, and another brother who worked in government.

• John grew up with a brother who worked in construction (his only healthy sibling), along with another brother who worked in government.

Setting the adjective phrase his only healthy sibling into brackets, helps the main gist of the sentence to flow more naturally. The main idea being that John grew up with two brothers of differing occupations.