It has to be either copied or encoded. Which one? Also we won't be able to help you unless you can craft a simple test case we can reproduce. So if possible, make up a filename that shows the issue. Thx.
I thought I said it doesn't work in copy mode. And I don't encode enough to say.
The problem - I think - has to do with the length of the file name. I posted one file name where it happened consistently. It doesn't matter what the actual file name is, only the length, because when it does happen only changing the length works, not changing the characters in the file name.
Another clue is the error message (can't open "↑":2) is almost always the same with "↑" followed by a number, 2 in this case. So it looks to like the file name gets corrupted when it's a certain length. Maybe it overflows into another field or something.
That's about as much as I can say from where I sit.
P.S. Easiest way to recreate it is to open a small 300 frame avi clip. Copy-save it to the exact same directory-filename structure as in my first post, preferably on a disk other than the boot disk. If it works, lengthen the saved filename (same dirs) by one char, and save it again on top. Keep doing that for a bit and it's bound to pop. I just did it on the third or fourth save. I'm on a Pentium 4 XP-SP3, if that makes a difference.