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This paper develops a non-coherent index modulation (IM) system in which activation patterns are characterized by multi-level block codes. We analyze performance of such a system under the maximum-likelihood (ML) receiver and when the set of activation patterns follows a multi-level code generated from asymptotically optimal alphabets. An asymptotic analysis of the pair-wise error probability (PEP) shows that the system can exploit a diversity order that is determined by the distance of the worst codeword pair in the $l_{1}$ metric, known as the Manhattan norm. We then explore the rate-diversity tradeoff for the developed non-coherent IM system as a function of the code length. Specifically, Gilbert-style bounds on the data rates for systems based on binary and ternary codes are obtained that can ensure a given diversity order. We approach the problem of packing in the $l_{1}$ metric by partitioning codes into permutation modulation codes (PMCs) and obtaining Gilbert-style bounds on PMCs. Several achievable rates for non-coherent binary and ternary IM systems, as well as a tradeoff between the information rate and codeword error probability (CEP) are also derived. Finally, simulation results are provided to corroborate the theoretical analysis. [ABSTRACT FROM AUTHOR]