I use a German Windows XP and my home folder is "C:\Dokumente und Einstellungen\Wellhöfer".
When my "C:\Dokumente und Einstellungen\Wellhöfer\.m2\settings.xml" settings file contains the line
<localRepository>C:\Dokumente und Einstellungen\Wellhöfer\.m2</localRepository>
downloaded artifacts are not put under "C:\Dokumente und Einstellungen\Wellhöfer\.m2". Maven2 creates a folder "C:\Dokumente und Einstellungen\WellhÃfer\.m2" and puts the artifacts into this folder.
When I remove the line
<localRepository>C:\Dokumente und Einstellungen\Wellhöfer\.m2</localRepository>
from settings.xml the artifacts are put into the correct directory.
MNG-2593andMNG-449).I suppose when the file contains the <?xml version="1.0" encoding="ENCODING"?> header, the parser should use it. It seems to me that the current pull parsers read only UTF-8?
org.codehaus.plexus.util.xml.pull.MXParser:2651
// TODO reconcile with setInput encodingName
inputEncoding = newString(buf, encodingStart, encodingEnd - encodingStart);