a) No, it’s not possible to specify the location in the config.php.
But you may change it in db.php, row 123:
include dirname(__FILE__)."/../languages/" .
safe_file_name($language) . ".php";
Please note that the file setup.php uses its own code for including
the selected language (just affecting the initial setup page).
b) The problem is probably that your text editor doesn’t support UTF-8
(without BOM) or doesn’t identify the file as UTF-8. If it’s not
possible to change the coding to UTF-8 in your text editor you should
try another text editor. (I’m using Notepad++ in Windows.) If you use
a texteditor with UTF-8 support you will find this line in
config.default.php:
$iptc_expectedchars="æøåÆØÅ";
instead of:
$iptc_expectedchars="æøåÆØÅ";
/Henrik