Why are some characters displayed wrong?

Most of the time, this is because the different IRC clients aren't using the same charset. The charset setting determines how characters are encoded and decoded. If the two sides don't agree on a method, then some characters will be displayed wrong. The best way to solve the problem is to ask the other person what charset they are using, but if you can't do that, some good choices to try are CP1252 and ISO-8859-15.