before you start your xHarbour DOS Client and tell me what the command returns.
specifying some condition to select the row with this particular value. Paste the result here.
SELECT column_name, DUMP(column_name,1016) FROM table_name WHERE ...
So, the code for "ä" in your database is 0x84. If you look at the definition of the WE8MSWIN1252 character set, for example here: http://msdn.microsoft.com/en-us/goglobal/cc305145 , you will see that the expected code is 0xe4. On the other hand, if you look at the definition of WE8PC850 here: http://msdn.microsoft.com/en-us/goglobal/cc305160 , you will see that the code for "ä" is 0x84 -- the one you have in your database.
d = 0x64 e = 0x65 c = 0x63 i = 0x69 s = 0x73 ä = 0x84 o = 0x6f