For Local Server, basically each application uses a different adslocal.cfg Within this file there is an ANSI Character Set and OEM Character set.
As you are using Local Server each application is its own server so it is critical that each and every one matches across each app and each workstation (even ARC and your .Net app are likely using two different adslocal.cfg files).
The other issue is that by default I believe the ANSI Character Set is set to "use current character set". Depending on the users if you have one set to Australian and another set to English, etc... it can cause this.
I would recommend setting these to Engl(Amer). After making the change re-index into the current character set.