- Travelling 1 unit horizontally towards the target costs 10 and gets you 10 closer.
- Travelling 1 unit vertically towards the target costs 10 and gets you 10 closer.
- Travelling 1 unit diagonally towards the target costs 14 and gets you 20 closer.
So of course it would pick diagonal paths first.
Edit: Also I believe that using the Manhattan distance if a unit can travel diagonally actually makes it an inadmissible heuristic. The heuristic should never overestimate the remaining cost. Not that I'm morally against inadmissible heuristics - they can cut down the search space nicely. But they aren't good if you're doing them by accident.