When two revisions of a file are highlighted in the History tab, there is a difference when the "Compare Contents" button on the toolbar is used and when right clicking on the highlighted files and selecting "Compare Contents".
Right click on the highlighted revisions, then from the context menu choose "Compare Contents". This will open the File Compare/Merge tool and show the differences. However, clicking on the "Compare Contents" toolbar button displays a warning which states "Files are identical".
The "Compare Contents" button on the toolbar will compare the file which is stored locally with the Tip revision which is stored on the StarTeam Server. This is why the warning message, "Files are identical" is shown. The local copy of the file is "current" and is identical to the tip revision stored on the StarTeam Server.
Using "Compare Contents" from the context menu in the History tab will open with the Compare/Merge tool and identify any differences between the two files.