I used a Prodigy with my first TM and a Trailblazer. I set the unit exactly as described in your post, and I was able to lock the trailer brakes with the manual brake activation lever (or button, I don't recall but think it was a lever).
So I believe these instructions are correct. My suggestion is find a straight stretch of road, and progressively add or subtract brake settings on the Prodigy so you can feel the trailer brakes stopping you when you use the manual brake lever. Don't put your foot on the vehicle brake, use the Prodigy. If the brakes lock, reduce the setting and try again. You want to feel the connected vehicle/trailer slowing and releasing when only using the Prodigy manual brake lever.
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