I haven't been able to find any reference in the instruction booklet to what character encoding the player is supposed to support, but it certainly isn't utf-8. It looks all wrong, just like when it's turned to ascii in output options. It seems that transliterating accented characters to their plain equivalents is necessary.
Yes, you're right about punctuation. So, I think unsmartening the punctuation and changing to ascii in Look & Feel would be the input options that need changing generally. I think I'll just change those manually if I want to make a .txt file.
Edit:
Bad picture, but those blocks are chinese-looking characters. This is a utf-8 .txt file that looks fine on PC:
Edit2:
I was wrong. The player can show utf-8 .txt files right. It just doesn't like them when they are created with Calibre. If I write a text document myself in Notepad and save it as utf-8, it looks like it should in the player. If I open a utf-8 encoded .txt created with Calibre in Notepad and without editing it in any way save a new copy as utf-8, it looks correct in the player when the original does not. They both look the same in Notepad, but the size is slightly different. But in Wordpad any non-standard characters from a Calibre-created utf-8 .txt file look wrong. If I open it in a net browser, it looks wrong unless I change encoding from Western to Unicode.
Obviously there's something wrong with my Windows settings, Calibre 2.72 which I'm using or my installation of Calibre or my Calibre settings.