Well... now that things are tracked down, it looks like something I can get a handle on.
Right off the bat it's probably related to 1094203. There could be a few others of mine that this problem is a part of.
Though I'm not setup to test Win32 at the moment, I'm pretty sure I can do some nice Win32 fixes and get at least this part going.
Additionally, it seems that bad filenames are part of the problem. For example, in this case we're probably getting that users' home directory in Cp-1252 and feeding it to the output routines that want UTF-8. To fix this, I can knock off a quick routine to 'sanitize' the data and make it safe for output. I'm also thinking that many things might benefit from this.
(Since I can't actually test, you may not want to move this bug to me, but I think I can do all the work to fix it)