Take a look at Sourcegear DiffMerge. DiffMerge is the compare and merge tool from their Vault and Fortress products, but they make it available for free as a standalone tool. One noteworthy feature is that it allows diffing of entire directory trees.
Edit: While DiffMerge remains a free tool, it nags for registration with a popup at least once a day (since at least version 4.2). It also states in the popup:
Select new features in future releases will also require registration,
but core features and fixes will be available to everyone.