Unfortunately, https://sourceforge.net/tracker/?func=detail&aid=2814767&group_id=119701&atid=684730 has been closed already, such that I had to open a new artefact to follow up.
Enclosed you'll find a zip-archive that unzips a directory structure, where some directories contain an umlaut.
There is a file named "dir.txt" that contains the output of a "dir . /s" on a German Windows XP SP 3 system.
This file gets processed by a simple Rexx script which extracts the fully qualified directory name and then uses the directory()-BIF to change into the just extracted subdirectory.
As can be seen by the enclosed Rexx program, this does not work for subdirectory names that contain high-ASCII characters (i.e. German umlauts in this case).
Developed and tested with a fresh build of ooRexx (ooRexx400_4859-x86_32-debug.exe) on Windows XP SP 3, CP 850 in a command line window.