Fresh new wordpress shows special characters, old one DOES NOT?

After updating my old blog to 3.0.3, all special characters were gone (replaced by symbol ? or some other symbols). And for the last 10 days I have been trying to solve this problem. I have tried all the solutions, and none have worked. At the end, I installed a fresh new wordpress, updated it to 3.0.3, published a test post with special characters in it and it WORKED. However, my old blog still does not work and there is no way I can move 1000+ posts to the new blog.

So this is what I did so far and where I am stuck.

1. After the update to 3.0.3, the whole database and all the tables changed collation to latin1-swedish. So I changed the collation of the database, of all tables and of all columns to charset UTF8, collation utf8_general_ci (even tried utf8_unicode_ci).

2. Then I tested the changes and saw that special characters still did not display correctly. Then I used the code

UPDATE wp_posts
SET post_content = replace(post_content, 'a??', '-')

and changed all odd symbols in all tables with the correct special characters.

3. After step 2, the author, categories and the post title WORK, but the BODY does not work. For example, a special character in the title of the post is displayed correctly, while the same in the body of the post is not displayed correctly.

4. I opened phpMyAdmin and went to wp_posts table to manually check the posts. In the table, all special characters are written correctly. Even more, if I copy the same array of special characters into post_title and post_content columns, characters in the post_title WILL BE displayed correctly, while characters in the post_content WON’T.

Now I am stuck and don’t know what to do! Please help!