FIXED! the problem was indeed that meld-1.8.6 was not saving the file to --output at all but meld-3.12.3 is saving the file. therefore this issue is now solved by using the new version (not yet in nixpkgs!)
Any fully featured git client will allow you to do a merge between branches. choose a git client Source Tree is a fine choice. Get the branches to be merged pull both branches you need to merge together after cloning make sure your feature branch is visible under "Branches" if...
Likely diffmerge isn't in %PATH%. Try to specify a full path to the command in mergetool.diffmerge.cmd and difftool.diffmerge.cmd (cmd settings 2nd and 4th sections)
Use the git checkout command to set the working tree to match the remote stage (3): git checkout -3 PATHS... Or the local stage (2): git checkout -2 PATHS... Then add the files and commit to complete the merge. Use git checkout -h if you forget which one is 2...