My DH cousin is Alicia ( said " ah-lee-see-ah") think that's how you had it. Second option anyway, with an emphasis on the "c" if that makes sense??

In regards to "say it how it's spelt" then I would say that second option is spot on. Since when do we pronnounce "ci" as a "sh"......that's how a "sh" is pronnounced. It's a C not an S.