I particularly like this line of argument. I hope you don't mind if I do not address your question directly. I will try to leave some things as interesting exercises.
Proof First, suppose $(M,d)$ is compact. Then any Cauchy sequence has a convergent subsequence by compactness iff sequential compactness, so it must converge altogether (why?). It is immediate that $M$ is totally bounded: $\varepsilon$-nets are open covers.
Now suppose $(M,d)$ is complete, and totally bounded. I show first that
Claim $(M,d)$ is totally bounded iff every sequence has a Cauchy subsequence.
Proof Suppose $(M,d)$ is not totally bounded. Then there exists $\varepsilon_0$ such that no $\varepsilon_0$-net has a finite subnet. Thus, pick a point $x_1\in X$. Then $X\smallsetminus\{x_1\}$ also fails to be covered, since we removed a finite subset, that is, $\{x_1\}$ is not a $\varepsilon_0$-net. This means there exists $x_2\in X$ that is $\varepsilon_0$-away from $x_1$. Again $X\smallsetminus \{x_1,x_2\}$ fails to be covered, so there is $x_3$ that is $\varepsilon_0$-away from both $x_1,x_2$. Continuing, what can we say about $d(x_n,x_m)$ if $m\neq n$? What does this tell us about the subequences of $(x_n)$?
Supose now $(M,d)$ is totally bounded. We may assume $M$ is infinite, else things are trivial. Pick any $x_1\in M$ Cover $M$ by finitely many $1$-balls. Then there exists a ball, $B_1$; that contains infinitely many points of $M$. We may pick thus some $x_2\neq x_1$. Evidently $B_1$ is also totally bounded, so we may cover it by finitely many $1/2$-balls. Since $B_1$ is infinite, there is a $B_2$ in this cover that is also infinite. Continuing, we find a sequence of distinct points $(x_n)$ and a sequence of nested balls $B_1\supseteq B_2\supseteq B_3\supseteq\cdots$ of radius $1,1/2,1/3,\ldots$. I claim $(x_n)$ is Cauchy. Why? Hint If $m>n$, $x_m,x_n\in A_n\supseteq A_m$. What can $d(x_n,x_m)$ be, at most?
Continuing, we know that if $(M,d)$ is complete and totally bounded, it is complete and every sequence has a Cauchy subsequence. But since $M$ is complete, every sequence has a convergent subsequence. Since we know compact iff sequentially compact for second countable spaces, we're done. $\blacktriangleleft$