If you are using windows xp, go to control panel > regional and language option > language tab. Check install files for east asian languages and click OK. You may need your winxp CD.
Under the advanced tab you need to select the langauge for langauge for non-unicode programs. Select Chinese(Taiwan) if the file is in traditional chinese or Chinese(PRC) for simplified chinese. Click OK and restart windows.
You should now be able to view the chinese properly instead of ascii character i any text editor.
To input chinese, in the languages tab click details. Click add and select the appropriate chinese input language and IME.