Index: Lib/distutils/command/sdist.py
===================================================================
--- Lib/distutils/command/sdist.py	(revision 88286)
+++ Lib/distutils/command/sdist.py	(working copy)
@@ -6,6 +6,7 @@
 
 import os
 import string
+import re
 import sys
 from glob import glob
 from warnings import warn
@@ -182,33 +183,39 @@
         reading the manifest, or just using the default file set -- it all
         depends on the user's options.
         """
-        # new behavior:
+        # new behavior when using a template:
         # the file list is recalculated everytime because
         # even if MANIFEST.in or setup.py are not changed
         # the user might have added some files in the tree that
         # need to be included.
         #
-        #  This makes --force the default and only behavior.
+        #  This makes --force the default and only behavior with templates
         template_exists = os.path.isfile(self.template)
         if not template_exists:
-            self.warn(("manifest template '%s' does not exist " +
-                        "(using default file list)") %
-                        self.template)
-        self.filelist.findall()
+            manifest_exists = os.path.isfile(self.manifest)
+            if manifest_exists:
+                self.read_manifest()
+                return
+            else:
+                self.warn(("manifest template '%s' does not exist " +
+                           "(using default file list)") %
+                          self.template)
 
-        if self.use_defaults:
-            self.add_defaults()
+            self.filelist.findall()
 
-        if template_exists:
-            self.read_template()
+            if self.use_defaults:
+                self.add_defaults()
 
-        if self.prune:
-            self.prune_file_list()
+            if template_exists:
+                self.read_template()
 
-        self.filelist.sort()
-        self.filelist.remove_duplicates()
-        self.write_manifest()
+            if self.prune:
+                self.prune_file_list()
 
+            self.filelist.sort()
+            self.filelist.remove_duplicates()
+            self.write_manifest()
+
     def add_defaults(self):
         """Add all the default files to self.filelist:
           - README or README.txt
@@ -372,13 +379,18 @@
         distribution.
         """
         log.info("reading manifest file '%s'", self.manifest)
+
+        # regular expression to match from # comment char to end of line
+        comment_regexp = re.compile('#.*')
+
         manifest = open(self.manifest)
-        while 1:
-            line = manifest.readline()
-            if line == '':              # end of file
-                break
-            if line[-1] == '\n':
-                line = line[0:-1]
+        for line in manifest.readlines():
+            # kill comments, will leave some whitespace
+            line = comment_regexp.sub('', line)
+            # trim leading/trailing whitespace, but preserve embedded whitespace
+            line = line.strip()
+            # skip lines without any non-whitespace character remaining
+            if len(line) == 0: continue
             self.filelist.append(line)
         manifest.close()