Pidgin: block characters in messages from iChat

all of a sudden I'm getting block (□ □ □ □ □ □ □ □ □ □) characters in all messages from iChat clients. I updated to the latest pidgin portable but it is still not fixed. It only affects messages from iChat (thru Aim and bonjour). Messages from normal AIM, MSN, Yahoo, and ICQ are not affected. If I highlight the block characters and paste it in another app like notepad, then the characters appear as normal words. I open the message log in pidgin and it shows block characters also. But if I open the log file in the pidgin directory, then it is normal.

Any ideas what is the problem here?