If you're building with Visual C++ 2005, you're linking with the new version 8.0 C/C++ runtime library (CRT). Microsoft's plan for msvcr80.dll is that it should be shipped side-by-side. Presumably this is why Visual C++ Express complains that you can't disable the manifest generation.

I suspect that the error you're getting from other machines is simply that the compatible CRT DLLs are not installed. You should use the Microsoft_VC80_CRT_x86.msm merge module if you're using Windows Installer for your installation package. The actual layout of the directories under Windows\WinSxS is, as far as I'm aware, undocumented, and you shouldn't try to install shared side-by-side assemblies by copying files directly into this directory.