This is a known weakness in the software, one that I'm not quite sure how to address. ID3 tags may contain Unicode characters, and WinCab attempts to use Unicode properly. It seems to work on some tags and not on others, leading me to believe some tagging tools are using Unicode and some are using some other method like code pages.
In your case, however, it sounds like the tags aren't being read at all, so the accented characters may not really be the issue. Are the tags being read for ANY of your songs?
--Chris