Maybe this is a cosmetic issue or it might be by design and I'm just not seeing why. Before posting this, I searched the past bug reports for "rotate" and "rotates" (both had no results) and searching for "expand" yielded no applicable results.
The issue described below has happened in past versions and still happens in version 2.16.28.0-x64. I will add the WinMerge configuration log and files (and folder structure) if you can't reproduce the issue with the info provided.
When users compare folders with subfolders and files, they can click on the icon to the left of the top level folder to expand the tree listing. That icon rotates 90 degrees clockwise when the folder is expanded. Clicking on that icon again collapses the folder (as expected); however, the icon does not rotate 90 degrees counterclockwise (back the its original orientation) unless the WinMerge window is no longer the foreground app (e.g. another app has been selected).
Let's see if I can upload a video (AVI) that shows the issue.
BTW, the link (http://winmerge.org/Wiki/Submit_Bug) in your instructions results in "Page Not Found..."
Thank you for your report.
This issue was reported and fixed 2 days ago. The next version will include this fix.
https://github.com/WinMerge/winmerge/issues/1747