Web Service and Swedish Character Encoding

I am building an XML Web Service, the Client in Delphi 7, the Server in MS ASP NET C# and with a database in SQL 2000. When I upload Swedish characters (åäö ÅÄÖ) to the server they will be stored as ?? (double question mark). If I write the characters manually in the database, the client can download and read them correctly. The problem is only in one direction from the Delphi Client to the server. The correct encoding should be ISO-8859-1, but where to implement it? Client, Server or Database? I have been struggling with this problem for a long time and I am running out of ideas. Can anyone please give me a hint what is going on?