Man, I cannot delete that readme since that would be pissing over the game engine and its developers. But you should generally ignore it, the proper readme files are in the 'xpiratez readme' folder
As for your problem - I have no idea what happened, since that's the first time such a bug is reported, and I'm here for years now. Hence I assumed following the install instructions helped, that's why I didn't adress it.
Steam version of UFO is fine as far as OG files are concerned. I assume you re-installed the mod from scratch again? Make sure you don't install it over any OXC install, but create a new directory (see, now it sounds like lecturing a school kid, I wanted to avoid that, and I'm sorry). I also assume you have selected the proper language version from in-game options, the only proper ones being US and Czech so far. But assuming these 2 things, the game should work.
It shouldn't be a problem with unicode, since the game uses its own font... but then again, I have little knowledge in that area. Your OS is same as mine. I'm willing to help, but I don't know how.
Also: does the title (XPiratez 0.98 blah blah blah) display properly, or all is in hieroglyphs? If so, it might meant simply an instalation error.