Thanks a lot for your response, Dr. Byte,

I am now installing new fresh zencart using your advice and that article. I just set the /zc_install/includes/installer_params.php file to use utf-8 as well:

<?php define('DB_CHARSET', 'utf8');

and when i started intallation process of zen cart I got Bad Getway Error. But when I changed installer_params.php file back to what was there originally, I see Instalation page. Any suggestions on what should I do now?:-(I guess the problem is somewhere here that my russian characters displayed as question marks. I am looking im Mysl forums as well to find the answer,but unfortunately no results yet:-(