After further inspection I found out that the above problem occurs only when more than one keyword is entered.
For example, if I enter "bruce", it works great. But if I enter "bruce campbell", then it does not find anything. (finds a lot with 8859-1). I looked at the admin panel >last search queries and it shows the keyword as this: bruceòcampbell
So, it somehow converts the space character to the "ò" character, thus it can't find any results.
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