[BUG] bzr merge not working on Windows

[Alexander Belchenko]

bzr merge not working on Windows. And selftest fails at test_merge. 
Archive with test directory of blackbox test_merge is here:
http://bzr.onembedding.com/test_merge.zip.

test_merge fails on Windows all the time from 0.0.7 release.

When I'm invoking bzr status from 'a' directory it says: 'pending 
merge'. What it means?

And HOW I can help to fix this?

Alexander.