How to work around the diff viewer problem in Team Explorer Beta 3
If you install only the Team Explorer (and not VSTS), there is a known issue (7.3) where the diff viewer won’t work. It also affects the built-in merge tool, but I think that’s less painful for users who just need Team Explorer.
The tool is diffmerge.exe, and it uses msdiff.dll. The msdiff.dll needs several missing several VC runtime dlls that normally get installed as part of the VS installation.
To work around this problem in beta 3, you can hook up a third-party diff tool. Just go to Tools->Options->Source Control->Visual Studio Team Foundation Server and click on Configure User Tools to specify the diff tool of your choice. Enter “*” for the Extension, the path to your diff viewer’s executable in the Command and leave the Arguments as “%1 %2” to hook it up.
For example, you could use windiff from the Windows XP tools. I think you can just copy the windiff.exe after extracting it on one machine.
You can find some docs for it here.