I have already downgraded to 2.18, but I am pretty certain the regression comes from 2.20:
C:\DFDeploymentSmokeTests [master ↑3 +0 ~12 -0 !]> git difftool
error: cannot spawn Í?: No such file or directory
fatal: external diff died, stopping at NonUITests/SiteCheck.cs
Everything works once I downgraded to 2.18.