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So I got a call from HR last week with a very nice job offer.... but it kind of blindsided me as my manager hasn't mentioned anything so far in my internship. I like the job, and I meant to ask my manager about possible full-time in the future... but as I've only ever worked at this company, I do want to try for other jobs and explore. I have till the first week of October to decide on the job offer... but how do I thank my manager that I am really appreciative of the job offer and that I'm seriously considering it... but at the same time I'm not sure yet.

Could I just say that because it was unexpected offer, I still need a little bit to think about it? I'm going to be continuing to work here for there next few months, so I just don't want my manager to think I'm ungrateful of the offer etc... how do I appropriately respond? Thank you!

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Just send him an email first, something to the effect:

Dear Manager, Yesterday I got a call from HR and they offered me full time position at this company. I am delighted to get this offer and waned to personally thank you for this. However, I did not even know that I was being interviewed or considered for this role. Hence, I was also applying to external positions. I just want to make sure I take a right decision at this point and also wanted to discuss few more details about the role before I formally accept it. Can we meet sometime tomorrow to discuss this in person?

And now that he would have a context for the meeting, you can again thank him/her in person and discuss your situation.

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how do I appropriately respond?

You don't, you're unclear on what you will do so don't respond until you do know or are asked. You have no need to thank anyone at this point and you still have plenty of time to make up your mind.

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