Hi Bevan,
I just tested this on my test site using version 5.65 of the Cart and setting my Gateway to Manual with the PayPal Checkout option enabled and when checking out with the PayPal option I was not able to replicate a Payment Status of "Credit Card". The order I processed was saved with a Payment Status of "APPROVED" (Please see the following screenshot):
Since you are running an older version of the Cart It's possible that this was resolved in a recent release or the issue may be specific to your environment. I recommend testing the latest version of the Cart in a test environment to determine if this is a version specific issue.
Hope this helps!
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