Using the latest version 1.24 the issue occurs after the following steps:

A. For the folder and filenames:

  #  Create a folder named "MañósosCarácteres"
  #  Create a file named "cönáñón" inside the new folder
  #  fossil addremove
  #  fossil commit -m "Añadí una carpeta y un archivo con tildes"

B. then on a different machine
  #  fossil update
The new folder named "MañósosCarácteres" is now available
  #  Add a new file called "éstedesdemác.rst" to the folder "MañósosCarácteres"
  #  fossil commit -m "Añadí nuevo archivo con tildes desde mi mac"

C. Back to the first machine
  #  fossil update
A second folder with the name "MañósosCarácteres" has been added. How it can add a folder with exactly the same name and have the file system accept this I do not understand. It happens on both Ubuntu 12.04LTS and OSX10.7.

One folder contains both files, and the other contains only the first file ("cönáñón").

In batch of files I was working on for a customer, that contained many non-ASCII characters, sometimes the file names would suddenly duplicate with inverse accents (going from á to à). If you need more examples let me know and I will do a similar run with all non-ascii characters that we use in Spanish.

Non-ASCII characters in file and folder names are not handled correctly