You can use 91-octane unleaded petrol, but to get the best performance and lowest fuel consumption it’s recommended that you use 95-octane Premium unleaded.
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Were you told why the first engine failed? It’s most unusual for an engine to fail at such low kilometres, and to have it happen again is unbelievable. If the engine has failed again and needs to be replaced Citroen should do it under warranty, which should still be current. If they don’t then go to the ACCC for help, or take your claim to VCAT.
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The Citroen has an automated manual gearbox, which means it is a manual gearbox with an automated shift mechanism, and what you're feeling is exactly what you describe, a smooth, slow manual change. It sounds normal.
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The Citroen C4 2011 prices range from $2,420 for the basic trim level Hatchback Attraction VTi to $8,910 for the top of the range Hatchback Exclusive.