I have just started learning the GNU Make/GCC/GNU Emacs (in terminal mode) combination, and ran into trouble when using swedish characters in GNU Emacs. I have previously worked with Emacs on the NeXT platform and on the ‘ol Amiga (in the MicroEmacs incarnation). But I never had this problem before.
The solution was simply to put the following lines in the ~/.emacs file:
(set-input-mode (car (current-input-mode)) (nth 1 (current-input-mode)) 0)
The above code was written by Michael Gschwind in 1994 (!), here is the ”original”!