This is interaction between the console font and the default encoding.

The terminal type should be set to "linux" for a console, and "xterm" or "xterm-color" for an X terminal. The "ansi" entries in termcap are horrible.

Then try first:
\nsetfont cp850-8x16\n

in a console, or start an xterm with the command line:
\nxterm -fn -misc-console-medium-r-normal--16-160-72-72-c-80-iso10646-1\n


If that doesn't work, change the default encoding to cp437 or cp850 from ISO8859-1.
You can alias this long name to something like VGA if you want.