test in 0.7.69-1.1.9 / OS:WINXP SP2 CHINA
mkdir chinese Charset DIR like 中国钓鱼岛
you can see error
C:\中国钓鱼岛\nginx.exe
2012/04/21 03:32:00 [emerg] 2060#3468: CreateFile() "C:\中国钓鱼岛\nginx-1.1.19/conf/nginx.conf" failed (1113: No mapping for the Unicode character exists in the target multi-byte code page)