Thanks guys. Yes, I agree the collation must be the issue... but according to a blog post by Microsoft,
SQL_Latin1_General_CP1_CI_AS is the standard collation and supports many non-latin characters. At this point, and for future reference I have 2 questions:
1) In order to have UTF-8 as the collation of the db, which collation should be specified? I don't see 'UTF-8' as an option in the drop down within the DB properties
2) Should I leave it alone for now, since it's working -- or should I still make the correction on the collation?
Thanks!