If you follow the instructions in the error, you should be able to get 
Versions running with FileMerge.

The command should be something along the lines of:
$sudo xcode-select -switch /Applications/Xcode.app/Contents/Developer 


the Versions team

On Wednesday, May 2, 2012 2:09:53 PM UTC-7, Martin Hardman wrote:
> XCode 4.3 no longer uses the /Developer directory. 
> As a consequence trying to compare files with FileMerge doesn't work. 
> Can you provide a workaround please? 

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