Not all of us who are working with team Foundation server know that it is possible to replace default diff/merge tool with a custom one. Default one is far from perfect, it seems that Microsoft did not pay enough attention to it and just left the possibility for customization. You may want to replace it with some of the better alternatives available; there are both free and commercial ones:

• Windiff. Of course…      
• SourceGear DiffMerge tool. Free tool from SourceGear.
• Beyond Compare. This tool is not free but it is just great.

This can be done in both VS2005 and VS2008. I feel you are curious now to how you can set you lovely diff/merge tool to be used by TFS. Here are screenshots guiding you to the right place buried inside VS UI.

If you have two instances of Team Foundation Server and want to move projects between them, now you can do that with new tool from Microsoft.

Some more details from Brian Harry on this subject

Straight link to download page