Actual Number of rows is too high even with new tables
The number of records in TransmittedManifests table is much less than the number of records in LWTest. In such scenario, good solution is to use NOT EXISTS  approach (as in Query 2) to reduce the number of actual rows. Refer Joins without JOIN - Rob Farley 

Now, Martin Smith’s comment helped me demystifying the count per execution (estimate) and total count (actual). For Query 1, the ActualExecutions="904" for LWTest table. So 128385/904 = 142 is the actual rows per execution which is somewhat close to the estimate 104. 

In SQL Server 2005, the ActualExecutions can be seen by making a profiler trace adding performance events as shown in the diagram below. [In SQL Server 2012, I could see this information captured in execution plan diagram itself].

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SQL Server 2005 Trace Settings