You are correct. The order of each element in the group must divide the order of the group. So, the order of each element must be 1,2 or 4. If there are no elements of order 4, then x^2=e for each x in the group (since the order of each element is 1 or 2). If there is an element of order 4, then this element is a generator, as you pointed out, and so the group is cyclic.