Yeah, that manure mix is going to be great for after week 2 but for seedlings, I'd only use it in a pinch- something a bit finer, lighter, and less ferty is better. Even the miracle-gro seedling mix or peat-pucks.
I think though that your problem is damping-off. Does the stem of the plant appear thin and dark immediately before it dies? It's a nasty, deadly fungus. If you have problems with pythium wilt in your grow area, you should ask why. High humidity or extreme temperature swings resulting in dewfall will do it, and so will re-using old dirt. The cloning product called 'rapidrooters' actually has a bacteria in it to protect against fungal infection and is great for starting seedlings too.