What is the difference between IKE and Manual Key?

Functionally, IKE and manual key VPN connections are identical; applications will work the same regardless of which is used. The only difference is how the encryption keys and SPIs for the VPN connection are determined.

In IKE VPN, one SonicWall connects to another to negotiate the encryption key, authentication key (if needed by the selected encryption method), and incoming and outgoing SPIs. Once these have been determined, the IKE session between the two locations ends. The two SonicWalls then use the negotiated keys and SPIs to pass packets between the networks behind each unit. Each time an IKE negotiation takes place, new random keys and SPIs are created for the VPN connection. Because of this, IKE is slightly more secure.

In manual key VPN, the encryption key, authentication key (if needed), and SPIs are predetermined by the administrator configuring the security association. There is no negotiation step as there is when using IKE.