Both spellings are wrong as per Sanskrit to English transliteration schemes.
According to IAST scheme, सनातन धर्म is written sanātana dharma or if you wish to capitalize the first letters, Sanātana Dharma also works.
Harvard-Kyoto (HK) is much simpler and easy to type. In HK, it would be sanAtana dharma.
When in doubt, you can use spokensanskrit.org and search for a word using its approximate English spelling. It then shows the correct spelling in both Devanāgarī and English (IAST or HK).
For the correct pronunciation of sanātana dharma, check the beginning of this YouTube video (Sanatana Dharma An Introduction_Part-1/9_What is Sanatana?).