If you prefer your own Diff/Merge tool over the standard TFS one, here is how to change the TFS configuration. Personally I use DiffMerge by SourceGear.
Associating a diff tool with a file type in TFS
Common Command and Argument Values for different Diff tools for TFS
For a Visual Studio project to display tests in the Test View window it needs to be created as a "Test" project. If you want to see the tests and it was created as some other kind of project originally, you should be able to add the following in the
<ProjectTypeGuids>{3AC096D0-A1C2-E12C-1390-A8335801FDAB};{FAE04EC0-301F-11D3-BF4B-00C04F79EFBC}</ProjectTypeGuids>
Now Visual Studio 2008 should display all your unit tests in the Test View window.
Thanks to this article for helping me out with this one.