FA Cup is not important with Manchester City and in many years, Champions League is where they want to focus most and win this title. This season is not different, and they will continue focusing on Champions League, as Manchester City know that with their quality, when they can exit the crisis, they can beat any strong opponents in Premier League and Champions League.
They started with a relatively strong lineup in the FA cup imo. Considering the opponent they should've scored more. It already happened in the previous round so that's not an issue but they clearly need to improve fast if they want to go at least to the semi-final in the UCL. Sounds like an arduous task even if Madrid also struggles quite a bit in La Liga. If we look at the stats with no context at all, Madrid knocked City from the cup quite often (3 times) too.