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I assume this only happens in ncmpcpp. Does your build of ncmpcpp support charset detection? See output of ncmpcpp --version. If this is not the case, try setting the following option in ~/.ncmpcpp/config:
system_encoding = <your_encoding_here>
And in ~/.mpdconf:
filesystem_charset "<your_encoding_here>"
Also make sure your xfce4-terminal matches this same encoding.
set | grep LANGsay? – jippie Dec 25 '12 at 12:42