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I would follow the policy and document everything. That way if your manager tries to hold it against you, she will be retaliating against you for following company policy. You can go straight to HR with that.
If your company is anything like ours, they already know so just go with the process
Same. Our company has that policy and the manager is immediately given an alert if another position is applied for
I would definitely follow the policy. Maybe they will be glad that you are trying to move to another position if you really don't get along? But I know that they probably will not be very happy at all if they find out you are doing things behind their back. Plus, it makes you look like you're not following company policy.
With a policy like that, it's usually safer to follow it, even if it's uncomfortable. You don't want to risk looking like you went against company rules, especially if you get the internal job.
Follow the policy to a fine point. Document everything. Your manager will be notified before you get selected for an interview. Regardless, if you tell them or don't. If they do not know and say something that could be harming your ability to move on to a new role. Take every precaution to protect yourself and keep them in the loop. So that there is no hidden surprises