1.2x to 1.3x migration problem.

hello all,
i am in serious trouble while migrating 1.2x database to 1.3x. After conversion (db update through db_update.php) texts are broken.

If you visit www.forum.projanmo.com/forums.php and visit www.demo.projanmo.com you will see the original and the problematic one.

so far I remember, this worked fine in 1.3rc or 1.3rc2. then what problem with this version?

thanks