It surely -is- a configuration error as Mercurial has no internal knowledge of
-any- merge tools. Something somewhere is giving Mercurial the name 'filemerge'.

The possible places are: .hg/hgrc, ~/.hgrc, /etc/mercurial/*, and HGMERGE

Now Mercurial ships with a file called contrib/mergetools.hgrc that we recommend
packagers install in an appropriate systemwide place with the following stanza:

filemerge.executable=/Developer/Applications/Utilities/FileMerge.app/Contents/MacOS/FileMerge
filemerge.args=-left $other -right $local -ancestor $base -merge $output
filemerge.gui=True

Of course, none of this should take effect if the filemerge tool isn't found.