Is it so that this only happens when you browse to folders (when using SQLite), and not when you go to e.g browse/albums?
What system local do you have?
Because, what I think I have noticed is that the library pulls the names from the metadata, in which case they might be displayed correctly even when the filenames are not. So for example, I have some playlits (local m3u lists of songs in /var/lib/playlists that do not work because they contain umlauts and the way the OS displays them is distinct from what the file has. However, those same files are displayed correctly when viewed from “browse/albums” or similar.