He's fine. Will get better. Texas playcalling was conservative against a strong defense in the first half; Manning then had to try to dig out of a 14 point hole in the second half. Texas is suffering from high expectations and will probably fall to like #10. I think they will claw back though.
I think there's still about a 50/50 chance that Texas makes the playoffs this year. Ohio State is a good team and might win the natty again this year. With that said, the Longhorns season depends on having a great season in SEC play. The real test is probably vs. Florida in the Swamp on 10/4.