I am using Team Foundation Server (TFS) for Visual Studio 2005.
Whenever i wish to compare two file\'s versions TFS displays a window with the differences.
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I've found the built in differencing tool in TFS woefully lacking so I set up WinMerge (http://www.winmerge.org/) in my environment in Tools -> Options -> Source COntrol -> Visual Studio Team Foundation.
A nice blog post exists below:
http://www.vitalygorn.com/blog/post/2007/12/Better-DiffMerge-tool-for-TFS.aspx