^M diff related problem

[Chuck.Irvine@mail.sprint.com]

When invoking diff in a bash shell, output gets generated with ^M 
terminated lines. This seems to cause certain diff dependent emacs 
commands, e.g. vc-resolve-conflicts, to misbehave. To illustrate:

***********************************************
> echo hello >> test
> echo hello >> test2
> echo hello >> test2
> diff -C 2 test test2 | cat -v -
*** test        Fri Jan 19 16:52:24 2001^M
--- test2       Fri Jan 19 16:52:44 2001^M
***************^M
*** 1 ****^M
--- 1,2 ----^M
  hello^M
+ hello^M
> echo $CYGWIN
binmode
************************************************

I've done some reading regarding binary vs text mode and the only 
relevant config setting I can find is setting CYGWIN to binary, which 
I've done, as shown above. After doing so, I still get the error above.

Any help with getting rid of these ^M would be greatly appreciated. 

Chuck
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