He rotates as he's moving backwards or forwards? As I said above, mine will not move forward/back until the character has rotated into place first, it's like a two step process.
I should also say, tested on official XBOX360 wireless controller.
It was unclear in your original post that this is what you were referring to, but yes, that's how the game works: Manny rotates in Camera-Relative mode, and always has.
It may be different in the upcoming Grim Fandango Remastered, however: http://www.grimremastered.com