Just to make sure I am understanding the issue properly: if data is entered through your software and stored in the AS400 database (Lotus Domino most likely?) when that data is queried and displayed either through your software or directly the extended characters display correctly. However, when data is entered directly and then queried, extended characters are not displayed correctly, being displayed one way when queried directly and another way when queried through an app?

Honestly, it sounds to me like the data entry app that produces the mangled output is using a different character set than the database. The database is trying to reinterpret the passed data with its own character set, with the result that the data gets mangled, and displays differently on each output platform. So, the input is encoded with charsetA on the input station, the server mangles it, trying to parse it as charsetB, then sends it back to the terminals which try to display the damaged data incorrectly in various ways. Just an early theory at least, but I see similar issues with MySQL when cutting and pasting data from Word using a basic charset that doesn't understand smart quotes. Different browsers will display the output in different ways trying to interpret data the database didn't understand or store properly.

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