So Im a source control idiot so please humor me with this checklist.
I finally decided to use Mercurial + TortoiseHg + (VS2010 + HgSccPackage) + Kiln for my next project
If your project is not controlled by mercurial yet, then you should use "Add to source control" command. Right-click on solution or project file in solution explorer and select the command in context menu. This command will also create a repository at solution/project location if there isn't one.
If you added the project to mercurial outside of Visual Studio, then you need to reload a project in IDE. Otherwise HgSccPackage don't know that the project is controlled.
If the project is controlled, then adding existing or new files to that project from IDE will automaticaly add them to mercurial.
Merge command is available in "Change log" dialog. To do the merge you need to "Update" to Rev1, then select revision you want to merge with (Rev2), and then run "Merge" command using toolbar command or context menu command.
If you think you found a bug in HgSccPackage, then create an issue with steps to reproduce at HgSccPackage issue tracker (http://bitbucket.org/zzsergant/hgsccpackage/issues).