Hi Ed - I don't have the UFM Diagram Manager available to me, but if I remember correctly a lot of the behavior is tied to the active tab in the ArcFM Attribute Editor. If the Selection tab is active the UFM Diagram Manage behaves in one way and if the Target tab is active, it behaves in another. This matters when adding connectors and splices and editing UFM features.
I don't remember the behavior that you mention but I do know that whether or not the UFM Diagram Manager appears is based on whether or not you are in edit mode.
I tried reproducing this in our environment and didn't have any luck. First I tried it with a session where the attribute editor was opened, but I closed it, but the diagram manager still opened. Next I tried starting a fresh session with no attribute editor, the diagram manager still worked. I ~did~ have the ArcFM Locator and ArcFM Identify tools opened, so I closed those and spun up yet another fresh session. Even with no ArcFM tools open, it was still able to work. For my last attempt, I closed all my toolbars but the base 2 toolbars + ESRI editor toolbar + the UFM toolbar, started editing, and the diagram manager still opened.
This is not as designed. You seeing any errors in the event logs?