There's only one place in the entire code base where that error is set, and that's in the INSERTSTRING_A action. It would help to know in much more detail exactly what's happening in your case. It looks as though you've entered a prefix containing some Cyrillic, but we don't know what encoding that uses. But since you're seeing an error that can only come from INSERTSTRING, I must presume you either get shown a list of possible completions and you've selected one, or all possible completions have a common prefix, such that in either case autocomplete is attempting to insert either your selection or the common prefix into your document.
Here's where it gets tricky. (copying from a comment in ne.h):
A buffer or clip at any given time may be marked as ASCII, UTF-8 or
8-bit. This means, respectively, that it contains just bytes below 0x80, an
UTF-8-encoded byte sequence or an arbitrary byte sequence.
The attribution is lazy, but stable. This means that a buffer starts as ASCII,
and becomes UTF-8 or 8-bit as soon as some insertion makes it necessary. This
is useful to delay the encoding choice as much as possible.
The string returned from AUTOCOMPLETE is evaluated for it's encoding independent from its source. For example, if it happens to contain only ASCII characters (i.e. below 0x80), it doesn't matter what its source document's encoding was. If that string is either UTF-8 or 8-bit, then it can only be inserted into a UTF-8 or 8-bit encoded document, respectively, OR into an ASCII document with the side effect of changing the target document's encoding from ASCII to match that of the inserted string.
Given that your document is marked UTF-8, my guess is that INSERTSTRING has determined that the string returned by AUTOCOMPLETE is 8-bit, and therefore can't be inserted into a UTF-8 document, thus the error. It could be inserted into an ASCII document, but with the side effect of changing that document's encoding from ASCII to 8-bit. The same 8-bit string could be inserted into an 8-bit encoded document with no side effects.
Your only options I see for making this work are (1) express your Cyrlic in UTF-8 encoding so that it can be inserted into a UTF-8 encoded document, or (2) use 8-bit encoding for both your autocomplete sources and your target document.
I don't think this is a bug; it's the only option given the constraints imposed by the document encoding conventions at play.