Let $X$ be a topological manifold, $G$ a Lie group, $\mu: G\times X\to X$ a continuous action.
Definition. A submanifold $C\subset X$ is called a cross-section for the $G$-action on $X$ if each $G$-orbit in $X$ intersects $C$ in exactly one point (more precisely, for each $x\in X$ there exists $y\in C$ and $g\in G$ such that $\mu(g,x)=y$, and such pair $(g,y)$ is unique).
Note that, in general, cross-sections do not exist. The simplest example is the action of ${\mathbb Z}_2$ on $S^n$ generated by the antipodal map.
Lemma. If $C$ is a cross-section, then the map $G\times C\to X$, $f: (g,c)\mapsto \mu(g,c)$ is a homeomorphism.
Proof. Since $C$ is a cross-section and $\mu$ is continuous, the map $f$ is a continuous bijection. Since both $G, C, X$ are manifolds, the invariance of domain theorem (combined with the Baire category theorem) implies that $f$ is a homeomorphism. qed
In particular, the $G$-action on $X$ is proper.
Corollary. The quotient $X/G$ is homeomorphic to $C$.
Now, to your question. Consider the subset
$$
C=\{(x_1={\mathbf 0}, x_2,...,x_n): ||x_2||=1, (x_1, x_2,..., x_n)\in X=Conf_n({\mathbb R}^k)\}\subset X=Conf_n({\mathbb R}^k).
$$
This subset is clearly a submanifold in $X$ (of dimension $(n-1)k-1$). It is also clear that $C$ is a cross-section of the $G$-action on $X$, where $G_0$ is the semidirect product ${\mathbb R}^k \rtimes {\mathbb R}$, where $t\in {\mathbb R}$ acts on ${\mathbb R}^k$ via multiplication by the scalar $e^t$. (This is the identity component of your group $G$.) Thus the quotient $X/G_0$ is homeomorphic to $C$, hence, is a manifold of dimension $(n-1)k-1$. To get the quotient by the full group $G$ one further divides $C$ by the order 2 group acting freely and generated by the antipodal map. Thus, $X/G$ is still a manifold.
Remark. I have no idea how did you conclude that the $G$-action is not proper.