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What is the setting you see when you go to Tools->Options->Fonts & Colors->Advanced->Character Encoding->Default Character Encoding ?
I'm set for "Western (ISO-8859-1)", and no problems here.
By the way, your version of Firefox is now out-of-date by four releases. The current version is 3.0.5, released yesterday. I'd strongly suggest doing a manual update immediately, and then enabling auto-updates for the sake of your security.
To prevent occasional weird problems, I also recommend un-installing the old version before installing the new version -- at least at every major revision or if not previously done. Unless you specifically tell the installer to delete your personalized settings, your settings and bookmarks will be preserved.