Can you please clarify what exactly do you mean by "turn on the "Document Manager" text for the button"? I am not quite sure what the problem is, but generally speaking when you insert a document in RadEditor, you insert a link to that resource with the text of the link set as the file's name.
The second time that you click on that document's link and try to update the Url, the text will stay the same and only the actual href link will be changed. This is expected behavior - the Editor cannot know if the user manually changed the text of the link and that is why it only updates the href property.
For convenience I've attached to this thread a small movie that shows this in action. Is this your scenario?
the Telerik team