Does this mean to install from the developer's site manually, to install it through the package manager, or to make sure that I have the "Source" box checked when I install it from Yast Package Manager? What risks are involved if the correct path is not taken?

Installing from the source normally means to install from the tar ball ie tar.gz file. You would then do the whole ./configure & make & make check & make install. The package manager and Yast are sort of kind of the same thing, someone will probably get angry if I say that ZMD and YaST update are the same thing. Anyway ZMD and or YaST update will get the lastest version on that repository that it's looking at. So it might not be the lastest version of the software.
Risks, well I guess really just that it's not the latest patch or version. Depending on what it is that your installing dependant packages either will not work or won't work fully.

Basically if you install from source you undertake all the compilation and linking to libraries, etc as a part of the install process. If you install a package, generally it's precompiled for a specific OS setup so that it can find the relevant libraries, etc. where it expects to find them