When we think about diction we are referring to word choice. Thus, when considering the word choice or diction in "The Black Cat" you need to consider which words are used that relate to the theme and create mood and tone, and are linked to the effects Poe is trying to create.
One way to start an examination like this is to simply see which words are repeated throughout the story. Proceeding in this fashion reveals that phrases like "evil thoughts" and "heart", "rest" and "sleep", "a rage more than demoniacal", references to God, and of course "black cat."
Each of these words and phrases of course need to be linked in with the theme of the story and how they create the dark, tragic yet ironic mood of the narrator who is haunted by the black cat which, in his mind, causes all of his misfortunes. Hope this helps give you some ideas!