TortoiseMerge whitespace options and conflicts

TSVN 1.4.3

Recently a user had a conflict after a merge into the working copy, so they
fired up TortoiseMerge. In the options they had the radio button set to
"Ignore all whitespaces" and this had the effect of hiding the conflicts
which were partially due to whitespaces. Even though they couldn't see the
conflicts, they still clicked the "Mark as resolved". What happened next
isn't clear, but somehow they managed to commit the file to the trunk with
the conflict markers still in the file. The ancillary conflict files were
deleted.

Out of this arose a number of questions:

1. Should the TortoiseMerge option "Ignore all whitespaces" hide conflicts
in files?
2. Can anyone explain why the conflict markers were not removed. My best
guess is that the file was locked by another process, maybe an editor, but
shouldn't TSVN have warned about this?
3. Not really a TSVN question, but how does svn determine that a conflict
still exists, it isn't only the presence of the ancillary files, is it
something in the entries file?

-- 
Regards,
Graham Bloice