passing on the resolution from the machine admin:
"It took me a while to figure it all out, but I found the issue in the end. To safe you my whole journey the bottom-line is the following: Picard, even the latest version, has a config file that tells it how to start it from within VNC, and it does not specify which encoding type to use. It defaults not to the server encoding, which is the proper UTF-8 encoding standard, but some random one.
"I made the changes to the Picard config to start in UTF-8 and it works now."