Good news, the latest drivers resolved this problem...
Thanks for the help.
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>Date: Wed, 26 Sep 2007 22:34:21 +0200
>From: Rainer Bauer <usenet@munnin.com>
>To: Mija Lee <mija@scharp.org>
>Subject: Re: [ODBC] problems accessing utf8 encoded databases
>
>Hello Mija,
>
>Wednesday, September 26, 2007, 10:13:57 PM, you wrote:
>
>ML> We are using 8.00.0100, but from what I've read it looks like utf-8 support
>ML> started in version 7.1. I didn't install the driver myself, but is there
>ML> something special I need to do to get utf-8 working with the odbc driver?
>
>seems there have been problems with the old driver. What happens if
>you use the 8.02.0400 driver that fits your Postgres version?
><http://www.postgresql.org/ftp/odbc/versions/>
>
>Rainer