we are able to match up the execution plan by throttling the max memory setting in Server 1.
Here's the KB http://support.microsoft.com/kb/2413549 that explains more memory could sometimes cause inefficient plans! Thank you Microsoft!
Thanks to Paul White for pointing this out in a different thread for a different issue.
Thank you everyone for taking time and looking into this.
However, still curious of what "occasionally" means in the KB article's CAUSE section!