Already checked the encoding Holmes. It is set to UTF8 and so is the board. Not sure what happened yet. Still trying to find the bug.
EDIT: Ahhhhh. It seems SMF has limited character set support for UTF8. I'll need to switch it, which is going to require some effort as they do not have a tool to undo UTF8 support. At least, not for the version we are running.
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Ok, see if it works now folks. A little hacking into the SMF source might do the trick.