Let me show you what your code is doing and see if you can spot the problem.
List wordsInFile1 = getWordsFromFile();
List wordsInFile2 = getWordsFromFile();
List foundWords = empty;
//Does below for each compared file
for each word in file 1
set count to 0
compare to each word in file 2
if the word matches see if it's also in foundWords
if it is in foundWords, add 1 to count
otherwise, add the word to foundWords
//Write the number of words
prints out the number of words in foundWords
Hint: The issue is with foundWords
and where you are adding to count
. arunmoezhi's comment is on the right track, as well as board_reader's point #3 in his answer.
As it stands now, your code is doing nothing meaningful with any of the count
variables