Well it looks like you indeed have it in manual focus mode. Those settings look a bit tough to shoot handheld though; the blurriness of your photo could be due to camera shake. 1/1.6 seconds is extremely difficult to keep steady (in my opinion). I suggest switching to shutter-priority so you can bump up the shutter speed to reduce camera shake. A good rule of thumb is to keep your shutter speed at the reciprocal of the focal length you're shooting at. For example, you said the picture was taken at 35mm; the reciprocal rule would suggest shooting at 1/35s minimum. Now this rule isn't always effective, but the faster the shutter speed the easier it is to reduce the effects of camera shake.
