I've set the external merge tool to be WinMerge, and I've also tried using the Custom option and pointing it to the exe-file, but I'm having trouble launching either, and I can't find any information on what the custom option needs to work.
When trying to launch external merge tool, a window pops up and disappears really quickly, and no application starts.
You can only use WinMerge as an external diff tool, not as an external merge tool (that's why it's not in the list of merge tools).
Ironically despite its name, WinMerge is not a proper merge tool, it only does 2-way comparisons rather than the 3-way merge that Git uses.
I guess I need to look into 3-way merge more that Steve Streetling mentions but I have setup WinMerge as an external tool. Here are the settings needed. It sets the display so your local file is on the right site.
The setting location: Tools->Options->Diff
External Diff Tool: Custom
Diff Command: C:\Program Files (x86)\WinMerge\WinMergeU.exe
Arguments: $LOCAL $REMOTE
External Merge Tool: Custom
Merge Command: C:\Program Files (x86)\WinMerge\WinMergeU.exe
Arguments: /w1 $LOCAL $REMOTE $MERGED
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