Installation/usage of latexdiff on Windows 7

I'll answer my own question here, in case this would turn out to be useful to others.

It appears that latexdiff was searching for the file latexdiff.pl in the path

C:\Program Files (x86)\MiKTeX 2.9\scripts\latexdiff\perl 

whereas MikTeX only installs the files in the folder \scripts\latexdiff. So I created a subfolder \perl, copied all the latexdiff files into this new folder, and added the .pl extension to those files (they originally had no extension). Then, refresh FNDB in MikTeX settings. And it worked!

There is a step-by-step installation guide here for installing latexdiff for windows http://techshangrila.blogspot.sg/2013/10/installing-latexdiff-of-windows.html