I use WinMerge, it does the exact same thing you say. Plus, it's open source.
If you don't like it, there's also KDiff3, but it requires two files.
Question
Quick Diff is great because - as the author says - rather than "having to create two files ... just paste in fragments of code to perform a diff". However, it's an online tool, and sometimes I'd prefer not to send code offsite.
Is there a similar, PC-based utility?
Ref: "Quick Diff Online Tool":- http://www.quickdiff.com/