The $LOCAL and $REMOTE arguments aren't be substituted correctly. Ends up having the arguments twice, non-substituted plus substituted.

e.g.

"C:\Program Files\TortoiseGit\bin\TortoiseGitMerge.exe" \"$LOCAL\" \"$REMOTE\" "c:\users\blah\appdata\local\temp\extdiff.rsbxh4\Blah.629d383316f4\myfile.txt" "C:\Development\Blah\myfile.txt"