• I was not able to find an open or closed issue matching what I'm seeing

Setup

• Which version of Git for Windows are you using? Is it 32-bit or 64-bit?

64-bit

$ git --version --build-options

git version 2.17.1.gvfs.2.1.6.gdc051a1
cpu: x86_64
built from commit: dc051a1f5beb8ce0b22051afd9be86a0541a534a
sizeof-long: 4

• Which version of Windows are you running? Vista, 7, 8, 10? Is it 32-bit or 64-bit?

64-bit Windows 10

• What options did you set as part of the installation? Or did you choose the
  defaults?

# One of the following:
> type "C:\Program Files\Git\etc\install-options.txt"
> type "C:\Program Files (x86)\Git\etc\install-options.txt"
> type "%USERPROFILE%\AppData\Local\Programs\Git\etc\install-options.txt"
$ cat /etc/install-options.txt

M:\>type "C:\Program Files\Git\etc\install-options.txt"
Editor Option: VIM
Path Option: Cmd
SSH Option: OpenSSH
CURL Option: OpenSSL
CRLF Option: CRLFAlways
Bash Terminal Option: MinTTY
Performance Tweaks FSCache: Enabled
Use Credential Manager: Enabled
Enable Symlinks: Disabled

• Any other interesting things about your environment that might be related
  to the issue you're seeing?

This is with a VFSForGit repo.

Details

• Which terminal/shell are you running Git from? e.g Bash/CMD/PowerShell/other

CMD

• What commands did you run to trigger this issue? If you can provide a
  Minimal, Complete, and Verifiable example
  this will help us understand the issue.

<modify some files>
git difftool -d

• What did you expect to occur after running these commands?

Beyond Compare 4 would launch, and allow me to modify and save source files.

• What actually happened instead?

Beyond Compare 4 launched, but changes made in the right pane were lost (and the error message below was displayed).

M:\gvfsDiffTest2\src>git difftool -d
error: cannot spawn .git/hooks/virtual-filesystem: No such file or directory
fatal: unable to load virtual file system
fatal: diff-files did not exit properly

• If the problem was occurring with a specific repository, can you provide the
  URL to that repository to help us with testing?

This is not repo specific, but is specific to using VFSForGit.