Here is a screenshot of after I select Text File. You will notice that in the lower left hand corner, the "Switch Source and Target" gets activated and the "Compare Data" button appears.
I almost always activate the window by right clicking on objects.
However, I just verified the same issue occurs when I use the dropdown menu. Database -> Compare -> Single Objects and then defining source and target.
EDIT: I also want to add that we have been using Toad for many years and have not experienced this issue until this current version.
Well it seems that I've fixed this already but forgot that I fixed it.
You can get the most recent beta here and give it a try. I There is a change log at the bottom of that page. It was fixed in the beta released on June 24.