Answer:
B) He's an outsider who didn't grow up there
I would say that punctuation, ie a comma , would precede the block quotation to set it apart and then quotation marks would be used to show that it is a quotation, both at the beginning and end of the passage. Quotations are good to show exactly what the author quoted meant so there is no doubt and which can then be accurately commented on.
#1 the sub-genres of not fic are :
theory and graphic
#2 the sub-genres of fic are :
mystery and legend
#3 the sub-genres of poetry are :
legend and maybe free verse
not sure on this one