After comparing two unequal directories (meaning the directory structure on the "B" side is different than the directory structure on the "A" side) and specifying an output folder, I changed the view to "Show Files only in B". Starting a merge and viewing a simulation I found something unexpected. KDiff3 wanted to copy a group of files that only exist in "B" (the same files that were listed in "Show Files only in B") into the root of the output directory, but it also wanted to delete an existing directory at the root of the output directory that had the .orig extension and rename it's newer version appending the .orig extension. This directory was not included in "Show Files only in B" and KDiff3 was not copying over a new version of it so it should not have been trying to create a backup. The directory should not have been affected in this merge. It was also the only one of several other folders with the .orig extension at the root of the output folder that KDiff3 wanted to delete and rename.
This is on Win2K SP4 512 meg ram