The very first thing you should do before starting to use the TFS explorer, is to replace the Diff/Compare Tool. The one that comes with Visual Studio is pretty bad. Here is a good blog post - Replacing the TFS Diff Tool that shows how to quickly setup a new tool.
I prefer to use SourceGear DiffMerge, but you can use whatever you like. Just, please do yourself a favor and change it to something other than the default.