This seemed to be the case with the last two updates I applied, both 1.8.2.n (I believe). I was very tempted to make this Major. As a manager, I use this a LOT for quick code reviews of commits. I have the "Allow SourceTree to modify ..." box checked. I did have the external diff set for BC3 but setting it back to System Default and restarting did not change anything. And, in any case, that option has always been available whether the diff was BC or kdiff3 or default.

Also, I had diff and difftool settings in the global .gitconfig file. But clearing those out made no difference either.

I have attached two screen shots, one from the latest version and one from 1.6.14.0