Custom label editor

I am developing a multilingual English/French application. Using the label editor, I enter an English label, then after switching the input language to French on the language bar (WinXP), I enter the French translation, as required. The French label appears as it should in the label editor. I save and close the label editor and rebuild the project. The resulting French labels as they appear in my application have any French-specific characters (accents etc.) replaced by a string of strange characters that do not belong.
What am I doing wrong?