When attempting a directory tree difference between two different drives -- one on the network and one local, if the network drive has not been used yet and has not been opened, the Diff dialog shows the error dialog box but it overlays the directory list of path1.
I was not able to cancel the operation or close the error dialog.
If I go to explorer and open the drive then attempt the difference check it works as expected.
I've attached a screen shot of the DIFFzilla dialog with the message.