From this old (2004) but may be still relevant article:
visual source safe doesn't always recognize text file types properly. when checking-in files using 'auto
' type -- it treats them as binary.
So when you compare two .sql files you might see 'binary files differ
' -- and nothing more. (that's how vss treats binary files).
The solution is to change the file type using the properties context menu for the file in source safe. Change the type to text, you should be able to perform the visual comparison. You can also click on the 'advanced' option when checking-in the file, and manually change the selection to 'text
' then.
To avoid in the future - you can add file type settings under the options menu in visual source safe, to set the default behavior for various file types there.