BTW have anyone looked at how webfolders in windows Explorer on Windows XP works. It will convert national characters to UTF8 and serve that to the server - this if great! However when it displays what is on the server it unescapes with local character set! I really do not get that!! In windows 2000 it at least stayed to local charset!!
In XP, you have to distinguish between the web folder client and the "xp webdav mini-redirector". The web folder client should work exactly as on Win 2000.
If you have a reproducible issue with one of them, please trace that, and post it to this list (or alternatively to the WebDAV mailing list). We can then possibly (1) add it to the known-issues list and (2) report the bug to Microsoft.
Julian
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