It's correctly writing out pretty-diff files as well, but it would be nice to not have the wdiff files cluttering the layout tests output directory.
*** Bug 67641 has been marked as a duplicate of this bug. ***
It looks like the wdiff output is currently working; let me know if you're still seeing an issue.
I had problems with it on opensuse. In the meantime I switched to ubuntu, now the wdiff output is working. A tiny issue still remained here, which is that nrwt outputs empty files for the wdiff output if wdiff is not installed (instead of not outputting anything).
filed https://bugs.webkit.org/show_bug.cgi?id=88709