Updated to sourcetree 1.9.5, fetch updates from remote, Merges are required. I select one of the files to be merged and press 'Launch External Tool'. In my SourceTree settings I have selected DiffMerge as the tool of choice.
Unfortunately DiffMerge is not spawned. Used to work before the last update.
DiffMerge Version 4.2.0
Source Tree Git: System Git 2.0