Problems with diff3 on win32

I'm trying to support my boss and a co-worker with SVN clients on win32.
They keep coming across situations (from working with the same code)
where an "svn up" requires merging updates and local changes. Diff3
keeps exiting with error 2 and leaves the merge incomplete. I've tried
several versions of diff3 including the one from unxutils.sf.net, aswell
as the latest 0.13.0 binaries.

Anyone able to shed some light on this? I have no win32 environment in
which to test this, nor can I do any debugging and building.

-- 
Debian     - http://www.debian.org/
Linux 1394 - http://linux1394.sourceforge.net/
Subversion - http://subversion.tigris.org/
Deqo       - http://www.deqo.com/
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