File comparison tools are something that needs to be in the toolkit of every professional software developer. They're essential for working with other developers to integrate changes and make it possible to track changes over time (in conjunction with source control). Most source control systems come with basic comparison tools but these tend to be fairly limited. This has lead to the development of a number of replacement tools. Of these my current favourite is Scooter Software's Beyond Compare.

There are many things to like about Beyond Compare. This starts with the price which at US $30 for a single user (at the time this was posted) and less in bulk is pretty much the most reasonably priced software I've encountered in the commercial world. It has a rather nifty feature list and version 3.0 (currently in beta) will be adding a few features such as 3-way merge that are not in the current released version.

I use this tool every day integrated with Team Foundation Server source control. Recommended.