Not sure why diff fails for you - works for me; as does grep:

VinsWorldcom@C:\Users\VinsWorldcom> grep --help | grep exclude
      --exclude=PATTERN     files that match PATTERN will be skipped.
      --exclude-from=FILE   files that match PATTERN in FILE will be s
+kipped.

VinsWorldcom@C:\Users\VinsWorldcom> grep --exclude
grep: option `--exclude' requires an argument
Usage: grep [OPTION]... PATTERN [FILE]...
Try `grep --help' for more information.
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