1) sounds like an event. don't know if you actually have to do something. i guess the fire will go away after a while (try save & reload if it doesn't, some spell effects tend to linger on the map even though they should be cleared after a while)
2) some buildings require certain city specalizations. for example, only towns can build Well/Inn/Festival, and only conclaves can build Sage/Cloister/Libary etc. the Cleric/Shrine/Temple of Essence line is only available in cities that have Essence (the blue tile yield that also lets you use enchantments on the city)
3) the city level ups are triggered at certain preset population capstones. city level ups increase the base resource production of the city (gold/research/production - increase is based on the level and type of city; for example, a level 2 conclaves gets an additional +3 base research, then another +3 a level 3 etc.); at level two, you pick the specialization that unlocks specific buildings for that type of settlement, and at level 3/4/5 you can pick one of 3 extra buildings that make the city more efficient (for example, a fortress at level 3 can pick a building that gives every trained unit +1HP/level, or a building that gives every unit trained in there the "charge" trait for free, or a building that gives every trained unit the "impulsive" trait for free)
4) resources are randomized. when you set up the game world, there is (among many others) a setting for resource density. higher settings will increase the chance that you get some more nodes. that being said, crystal is supposed to be rather rare i think. you need that stuff for magic weapons and accessories which will be a significant upgrade over units with just mundane, metal (or production) based items from the warfare tech tree.
5) in the diplomacy window there should be the option "I declare war!". this option will be greyed out if you have a non agression pact or one side pays tribute to the other. you have to wait until those treaties expire. You can't just attack their cities - a formal declaration of war is required before you can attack them.
6) make sure your drivers are always up to date; if that's not the problem, I can't really help with this. works all right on my machine.