Problems with Swedish characters

I’m having problems with displaying Swedish characters in email notifications, and sometimes when pinging other blogs.
A sentence like this:
“Guinness Världsrekord – 50 Ã¥r”

displays like this:
“Guinness Världsrekord – 50 Ã¥r”

I’m using UTF-8 for my blog. When I tried changing it to 8859-1, even the actual titles in my blog showed up with the strange charaters.

My WP blog can be found here:
http://www.smidigt.se/

Is this a known bug? Anything I can do to fix it?

Thanks in advance!