Ahh, this explains a lot. Glad you got it working! And yes, Prodigy currently uses spaCy 2.0. Models between spaCy 2.0 and 2.1 aren't compatible, which is likely why you were seeing this error.
It's also the reason we're still working on testing spaCy v2.1 with Prodigy before we release the new Prodigy version that depends on spaCy v2.1 (see this thread for details). Once that's out, everyone will need to retrain their models, so we need to make sure everything works as expected.
Also, just to clarify:
Yes, I meant that you could also use the en_core_web_sm model. Its tokenization rules will be the same as the tokenization rules of the blank model, and the tokenizer is all ner.manual needs. (It pre-tokenizes the text to make it easier to highlight words because the selection can snap to the token boundaries. It also helps you spot tokenization issues and prevents you from blindly creating annotations that will never be "true" in real life because the tokenization doesn't match the entities you highlight.)