Well, if a territory starts as neutral, but is not a starting position, then manual placement won't override the neutrality. Neutrals still start as neutrals in manual, just like in automatic. Unless they're starting positions.
In fact, manual is just the same as automatic, just that all territories (except neutrals) start with 1, and the troops that would have been dropped on them, you get to distribute as you will.
Take feudal for example, where every player starts with 1 territory. If you play it manual, you drop 1 on the starting castle, and get the rest of the starting troops to freely manually distribute on that 1 territory... (meaning, you get to decide if you put them in all at once or one at a time

)