UBB.threads v7.7.x should ship by default with UTF8 enabled as it is standards compliant; this is something you'll need to change if someone changed it to iso during a fresh install; this could also happen if you do not upgrade your language files and rely on the upgrade script to patch them for you.

/languages/english/generic.php should be:
Code
$ubbt_lang['CHARSET'] = "utf-8";


Yours sounds like it is:
Code
$ubbt_lang['CHARSET'] = "iso-8859-1";

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