Can I recommend a safe and freely available product called DiffMerge from SourceGear…
Graphically shows the changes between two files. Includes intra-line highlighting and full support for editing.
Graphically shows the changes between 3 files. Allows automatic merging (when safe to do so) and full control over editing the resulting file.
Folder Diff screenshot
Performs a side-by-side comparison of 2 folders, showing which files are only present in one file or the other, as well as file pairs which are identical or different.
Windows Explorer Integration.
Right-click on any two files in Windows Explorer to diff them immediately.
Rulesets and options provide for customized appearance and behavior.
Compatible with 42 different character encodings.
Identical feature set on Windows, Mac OS X, and Linux.
While you are there, check out their other flagship tools perfect for small to medium sized development teams!