Accented characters do not display correctly when running GNU Emacs inside a Windows Command Prompt

[George Politis]

Hello,

If I run GNU Emacs in console mode (with the -nw switch) in PowerShell or a 
Command Prompt, then accented characters appear as escape sequences in the 
editor. For example, if I type the letter ``é``, I get ``\202``, for ``à`` I 
get ``\205``, etc. In windowed mode (without the -nw switch), it works OK!

I am not even remotely familiar with the Emacs source code, but I suspect that 
this might be a problem with the way it reads characters from the Windows 
terminal. Then again it might be an obscure configuration error on my part.

I've tried all possible combinations of the following lines in my init file:

(prefer-coding-system 'utf-8)
(setq coding-system-for-read 'utf-8)
(setq coding-system-for-write 'utf-8)

I'm using the Win32 build of GNU Emacs 24.2.1. 

Can somebody please help me or confirm that this is a bug?

Thanks,
George