You can store the manifest wherever you want - this will contain the relative pathways for where your assets are hosted - check the JSON file for the specifics. At least for Hello World you just need to make sure you’re referencing the proper path - which if you’re running in Local Mode will be the local folder.
If you’re still having trouble, I’d recommend checking out the next iteration of the Developer Rig (due to release next week)- go to https://github.com/twitchdev/developer-rig/tree/project to clone/download a zip. Caveats - it’s still being tested and is not a release candidate yet (the docs haven’t been updated either). But, for the problems you are having, it should hopefully simplify things. Once you download it, just click the run script to make sure your rig and dependencies are configured, navigate to the root of the rig and type yarn start. You should be able to set up your project all within the rig, and your manifest is taken care of for you.
Good luck!