I tried what you suggested and I know it took effect because echo $LANG returned export LANG=en_US.UTF-8
the ls command listing still shows a ? in place of accented characters. But the actual line where I'm typing commands will display accents properly.
I started the java app from the same command line and it still puts a block in place of accented characters. I also tried the locales en_US and es_US (Spanish, I think) with the same results.

Next, I ran "dpkg-reconfigure locales" and selected "all locales." Same results.
Then I ran "locale-gen." Same results.

I did an HD install from the KNOPPIX DVD 5.1.1 with the option that makes it run live the live DVD. File system is reiserFS.