To get Debian to correctly display german Umlauts (äöü) in a console install the following packages:
aptitude install console-setup ncurses-term language-env
I am not sure if you really need ncurses-term und language-env but i won’t hurt.
When you configure console-setup use the standard options press enter. Then issue the following command
dpkg-reconfigure console-setup
Edit /root/.bashrc and /etc/profileand add the following line.
export LC_ALL="de_DE.UTF-8"
The reconfigure your locales with:
dpkg-reconfigure locales
And make sure you tick all boxes with:
de_DE
Then logout or reboot you system and enjoy your umlaut. This howto should also work for other languages. Just change de_DE for you locales.
Thanks for the original german howto goes to: