I try to create a playlist from m:\ΩMusic and individual paths get encoded as m:\OMusic ... with no easy way to change it in Notepad++ (my preferred editor). Changing the encoding to UTF-8 means I also need to replace all the accented and umlauted characters in the filenames.
If you want to create a playlist in UTF-8 format use as extension m3u8 instead of just m3u.
See also the documentation:
Thx. I forgot. I always wondered what the "8" stood for in m3u8 and now I know.