It’s aboveground. The entire ride is contained in the big building that you can see from Downtown Disney. The only underground part is a little stretch of the queue where you dip under the railroad tracks that encircle the park.
Here’s a video made by a guy who’s created a 3-D model of the whole attraction.
For the record, I was not actually part of the bet. I am the ‘impartial judge’. I think the video should provide enough evidence to convince the loser of the bet to pay up (although the construction pictures showing the three-story above ground building didn’t do the trick…)