Talk to gardeners, landscapers, nursery people, neighbors, etc. from your own area for advise on how they raise Citrus (amending the soil, raised beds, etc..). Your conditions in terms of soil condition, temperatures, humidity, etc. are completely different from conditions in the Southeast or East or any other areas where Citrus are grown (even if only containerized). But I would echo what other posters have said. Summer is not the time to transplant first mistake. You could next time hold off planting Summer purchased (often discounted plants) until the Fall or Winter months. (Citrus do quite well containerized or in raised beds due to improved drainage btw.) There is obviously some kind of drainage issue. Not matter how hot and dry your air temps are, Citrus are not going to tolerate muddy conditions. I would like to be optimistic, but prepare for the worst. Also, stop fertizing it! Will do nothing but aggravate the situation. On a positive note, I have had Citrus come back fully to flower and fruit from 100% defoliated trees. Good luck!

Josh: Do you know any other method to check the soil dampness? (I can't use the "finger test" method because the soil is so hard and full with roots so it's impossible to stick my finger down there). Johnmerr: Thank you for the suggestion! I will give it a try. There is another thing. There is a instruction tag came with the tree that says I should only repot it after 2 years. However the soil doesn't seem to have good drainage to me (when i water it, the water doesn't go right down but stay on the surface of the soil for a few minutes, I then have to wait until it's absorbed by the soil then repeat again until I see some water running down the drainage hole at the bottom). Is it normal so? Or should I repot it and replace it with better soil?

Joel, 'worm compost' used in any fashion except for tiny traces in your pots will clog your mix and stunt growth eventually..Trust me, been there done that..Growing in containers is entirely different than growing in the ground. Worm compost in the ground does wonders when the beneficial bacteria in the 'live' soil breaks it down and makes the nutrients available..In the pot it's it's unreliable because of flucuating temps and the lack of live microbes or beneficial bacteria, especially in over heated pots and when growing in doors.... What I like to use is a mix that is porous, allows good oxygen exchange for a long time and a good all around chemical fertilizer that feeds your trees right away..I use Foliage Pro in particular...

You could just leave them in the clay pot and place those clay pots into decorative plastic containers with holes as I do. John's right, I found that many of my trees did not perform well when nights got too cold in clay. They never rotted because I use a porous mix but they most certainly had growth issues during all the months but summer unless they were kept in a very warm room which I do not when they came in. Root rot is not caused from too much moisture, but from a lack of oxygen to the root zone which most heavy compacted mixes will prevent. If you are growing that tree in a very good mix that allows oxygen exchange and helps keep the roots warmer on cold nights it should recover..If you want to see an even faster recovery during the shorter days, provide extra lights and warm conditions...) Root rot can not be caused by just cold, but poorly oxygenated roots combined with cold which is why many use use a porous mix or a small pot just big enough for the root ball when using a high quality bagged mix..