You need to say "de facto." That question is used to determine which visa you are applying for - partner (de facto, married) or PMV. If you check "engaged" they will think you are applying for a PMV. Definitely use evidence of your engagement, feel free to refer to her as your fiancee, include photos, talk about your engagement in your personal statements, etc. But for that box you need to tick "de facto."
Original Nationality: US
Visa #1: PMV (300) through Washington, D.C
Applied: April 2013.
Visa Granted: January 2014.
Visa #2: Subclass 820 (From PMV).
Applied: End of April 2014.
Visa Granted: Early July 2014.
Visa #3: 801 (PR)
Eligibility Date: End of April 2016 (Applied a month prior).
PR Granted: Early April 2017.