It may or may not be related, but when syncing via MTP to a WinMo device, the generated playlists (.asx) are in ANSI. ASX playlists can be in UTF-8, but somehow it just is not.
When WMP syncs with a device it also does not generate UTF-8 playlists, so I'm guessing it's something with the MTP protocol more than anything. In my case, since it's a phone I wrote an application to match files heuristically so it's not that bad... good to have fixed, if possible, though.