If you can tell me how to edit the xml file so that mt-daapd can process the path info for something like …/Björk/…, which iTunes writes as ../Bj%C3%B6rk/…, I can do it for the other cases myself, even if that means having to change the xml entries manually.
… and if I knew that, I’d do it in code. 🙂
But maybe it’s in codepage. In 850, an o with a diaeresis is 0x94, looks like. Try that.