the utility works well when comparing versions of populated xml files. But, when trying to compare empty versions of xml (to see if the schema and/or tag names have changed) it treats both files as single line rather than multiple lines. when processing the populated xml, the utility processeded line by line.
The tool always works line by line. I suspect that when you compared populated XML files they had linebreak characters while the empty ones did not. To verify, open files in a binary editor and see if there are 0x10 characters at line ends.