I've just started using KDiff3 as my diff and merge tool in Subversion. I'm stunned, this tool solves a problem that has bothered me for eons in VSS (and other merge tools). It shows the differences by character. Which means if only two characters have changed on a line it shows you. You're not left guessing which characters they were.
To use it: fire up your TortoiseSVN context menu and choose "settings". Select the Diff/Merge tab and point to KDiff as your diff and merge program. Give the parameters: “%mine %theirs -o %merged“
It's that simple.
Found via Craig Andrea
Update: add the parameters to point KDiff to the files.