Tool to compare directories (Windows 7)

The tool that richardtz suggests is excellent.

Another one that is amazing and comes with a 30 day free trial is Araxis Merge. This one does a 3 way merge and is much more feature complete than winmerge, but it is a commercial product.

You might also like to check out Scott Hanselman's developer tool list, which mentions a couple more in addition to winmerge

I use WinMerge. It is free and works pretty well (works for files and directories).