Sorry for my late reply. Manual Connection is for specifying the URL for updating server or updating repository. You can setup your update repository using the Update Synchronizer. By setting up the Update Synchronizer, you can then point to your local file system in Manual Connection field to perform update.
Details about Update Synchronizer can be found in http://oldresources.visual-paradigm.com/tips_and_tricks/general/keeping_your_tool_up-to-date_by_update_synchronizer.html
I hope these will help. If there are any further inquiries, please do not hesitate to contact me again.
