Beyond Compare is excellent as @BobbyShaftoe has already mentioned. For merging however, I like to use Araxis Merge. We use it for similar purposes quite often.
As far as your comment about the nontechnical ability of your users:
Thanks for the Responses... But these all seem too technical. My users normally do not see the xml tags because their XML authoring tool abstracts them away. Are there any tools that display differences in the text content, but do not show (or de-emphazise) the xml tags.
I'm going to throw this out there: your users should learn. If you have them merging and changing XML files - I'm assuming potentially for record keeping or application configuration - then they should have at least a rudimentary understanding of what they're doing. They don't have to be XML whizzes to use the tools listed and get the job done.
If, however, requiring your users to have a rudimentary knowledge of the job they are doing is impossible, then I would suggest writing a configuration utility yourself and delivering it for your end users, rather than relying on 3rd party software.