The best thing you can do with such questions is to try to establish small results that will help you deal with a common problem.
For example, it is not difficult to determine that for any three points A, B and C that have the condition that B is between (more on this per second) A and C, B will never be more from the fourth point D than one of A and C. With the standard Euclidean distance metric, a point is located between two other points if it lies on the segment connecting them. For Manhattan measurements, this is not so simple - partly because the concept of a segment is not well understood.
A more general way of describing โbetweenโ is (using the notation that the distance from A to B is | AB |): Point B is between two points A, C if | AB | + | BC | = | AC |
You can see that at Euclidean distance this means that B lies on the segment connecting A and C.
At a Manhattan distance, this means that point B is contained in a rectangle defined by A and C (which, of course, can be a straight line segment if AC is parallel to one of the axis).
This result means that for any point, if it lies between two existing points, it cannot be more from any new points that are added to the set than those that surround it.
Now this information does not solve the problem for you, but it allows you to discard many potential future calculations. Once you have determined that the point is between the other two, it makes no sense to track it.
Thus, you can solve this problem only by tracking external points and not paying attention to what gets inside.
An interesting exercise for the casual observer
Prove that you can have no more than 4 different points, so that none of the points is between the other two in the sense of Manhattan.
With this second result, it becomes clear that you will only need to track up to 4 points.
Some of the methods already presented are probably faster, but this method is more fun!
Additional loan
Summarize these ideas in n dimensions