Choose the grammatically INCORRECT sentence:
C. She is a European
"The sound of a word's first letter determines which to use. If the word starts with a vowel sound, you should use an. If it starts with a consonant sound, you should use a."
The word "European" does not start with a vowel sound, it starts with the syllable "you". The "y"-sound is in this case a consonant (or at least a half-consonant), so the indefinite article is "a".
Your explanation is very correct. However, the rule I knew is the exception where the word pronounces starting with 'eeu-' (i-u) or 'oaa-' (o-a) (sorry, I transliterated from Bengali; I studied grammar in that language :)), it will be a instead. Example, a European, a university, a one-eyed deer, a one-hundred rupee note.