Merging with Mercurial
Merging doesn't need to be done until you want to push all your commits to the SourceForge repository. You'll probably do so every time you commit, but there may come reasons not to.
Merging seems to work better from the Hg Workbench. That should be on your right-click menu when you click the project.
In addition to a bunch of other buttons, the toolbar contains the four important one from the synchronize tool. Start by clicking 'Check For Incoming Changes From Selected URL'. If there are no incoming changes, then everything is easy. Just push your changes to the server.
If there are changes, click 'Pull Incoming Changes From Selected URL' to get the changes. The upper part of the workbench will have a little graphic of the left visualizing how things have branched. Right click on the latest change to have come in remotely, then click 'merge with local'.
You'll get an initial dialog describing which version are being merged. Click Next. Mercurial will try to automatically merge what it can. But it will fail on the change log at the very least. Click the link that says 'resolved'. Close the upper dialog, then click Next on the merging dialog. On the final dialog, commit the merge.
And now you can finally push your changes to the SourceForge repository.
A new dialog will open. This is where things get misleading. Select the files in the 'Unresolved Conflicts' section and click 'Mark as Resolved'. They will move the the 'Resolved Conflicts' section. Select the files in that section and click 'Diff to Other'. Now, on my machine, this opens the files in Beyond Compare. Unless you've bought and installed it on yours (which I highly recommend, it's worth the money), you'll probably get a different tool. In any case, use the relevant tool to merge the files properly. And while doing so, add a line to the changelog about the merge, this will be its own commit. Save the files and close the diff app.