I am trying to set up WinMerge as the Merge tool into TortoiseHG; Here is my Mercurial.ini:
; User specific Mercurial config file. ; See the hgrc man page for de
You can add
winmergeu.binary=True
as found here if winmerge can merge binary files. If it can't you'll want to configure another merge tool that can and use matters to send the binary files to that tool.