What exactly do you mean with "implement a UAC prompt"? IF you want your application to require administrator rights, embeding or adding the manifest is the right way to go.
You probably got the error that it failed to load the manifest because you have to specifiy include directories for resource seperately. Make sure that the folder which contains your manifest is included in the resource include paths (Right click on project -> properties -> Resources -> Additional include directories). Please note that it is not possible to elevate the rights for an already running process.
If you want to trigger an UAC prompt from a certain point in your application, there is a way to do this using this technique: http://msdn.microsoft.com/en-us/library/ms679687(VS.85).aspx