Twocents smiley magically appears and disappears

[pnegyesi]

We use SMF 2.0.6 for a forum (autopuzzles.com). It is not very properly managed, so my brother stepped in. Let me hand over the keyboard to him:
After moving an SMF forum to a new server we got this -- the twocents smiley everywhere. Eventually I kicked it by running update smf_smileys set code=':2c:' where filename='twocents.gif'; and so that was good.

The CREATE TABLE has ENGINE=MyISAM AUTO_INCREMENT=75 DEFAULT CHARSET=latin1  this which makes me wonder seeing the ¢ in there -- is this supposed be UTF-8? Or is there somewhere I should set Latin1. I am very confused, I am a very experienced LAMP developer but never before tried to get SMF running.