PHP storing user entered MS Word characters incorrectly into MySQL -

my web site generated php , javascript , mysql database. i'm developing , debugging code eclipse helios.

i'm trying fix form should work correctly when users cut , paste micsosoft word.

php should save text mysql database entered, , want sanitize upon retrieval database.

retrieving , sanitizing seems work fine. however, text stored in database different entered.

for example, when enter "baño", gets stored "baño"

i stepped thru code debugger, , can see sql code generated as:

insert table1 set column1 = 'baño' 

the next step is:

if (!mysql_query($sql, $db)) { ... 

if database using phpmyadmin, or retrieve php, see value of column1 'baño'

mysql uses latin1_swedish_ci default, , tried changing utf8_unicode_ci, , utf8_bin, there no difference.

similar code works correctly on other databases.

what doing wrong?

===================

added:

this big web site on 100 php files , js files. database server has 20 databases , in them few hundred tables.

my problem happening in 1 php file , 1 table. no other code writes table, , files doesn't write other table.

here's info phpmyadmin:

mysql      server: localhost via unix socket     server version: 5.1.43-log     protocol version: 10     user: root@localhost      mysql charset: utf-8 unicode (utf8)   web server      apache/2.2.3 (unix) mod_ssl/2.2.3 openssl/0.9.7b zend core/2.0.1 php/5.2.1     mysql client version: 5.0.27     php extension: mysql   phpmyadmin      version information: 3.3.7 

use

mysql_query('set character set charset_name'); 

before doing query.

also, version of phpmyadmin using? @ header in html source , make sure it's utf-8.