I think we only go out if Roma beat Inter (or vice versa) in normal time and we lose to Madrid in normal time. One thing I'm unsure on however, is if head-to-head or Goal Difference is the first tie-breaker on teams tied for points.
For example, if Roma beat Inter to go to 6 points, and we then lost the shootout after a draw with Madrid, Roma have the better GD but we beat them in our match... I assume if the answer isn't out there already it'll be mentioned during the game.
We'd probably play City in the final, so it'd be a good test, but as mentioned already, I'm not sure if LvG would really want the extra game when we have Valencia at OT so close to the start of the season anyway. I'm sure he wishes he were back in Manchester already concentrating on training and signing the players he requires.
If they have Ronaldo and Bale, then it's going to be difficult for us and they will score - but at the same time, they've looked average in their performances so far, so I think we'd get a goal too.
As for the team:
de Gea
Smalling Jones Evans
Valencia Cleverley Herrera Shaw
Mata
Welbeck Rooney
Lindegaard
Jones Keane Blackett
Valencia Fletcher Herrera Young
Kagawa
Zaha Hernandez
Fletcher, Evans, Young played 90 minutes against Inter, so I'd be more inclined to expect 45 from them in this game, with 2-3 different players playing the full 90 this time.
James will probably get game time if he isn't injured, with Nani/Lingard also having a chance of playing (probably with Herrera getting subbed and Kagawa playing next to Fletcher).