I've just upgraded from 1.19 to 1.23 and since that the short URLs only works, if the title contains ASCII characters only. If there are czech national characters in the title, the page is not found, because the national characters are wrongly encoded. I can still open the pages using short URLs, when I enter the short URL directly into the navigation bar. So redirection in my IIS7 seems to work normally. If I disable the short URLs by $wgArticlePath, it works (except for showing images, but this is a different problem).
IIS7 logs:
'''1) short Url disabled''' 2014-06-09 12:09:23 192.168.5.203 GET /w/index.php title=Hlavn%C3%AD_strana 80 UNICONTROLS\kalas 10.10.2.45 Mozilla/5.0+(Windows+NT+6.1)+AppleWebKit/537.36+(KHTML,+like+Gecko)+Chrome/35.0.1916.114+Safari/537.36 304 0 0 281 '''2) short Url enabled''' 2014-06-09 10:43:57 192.168.5.203 GET /w/index.php title=HlavnĂ_strana 80 UNICONTROLS\kalas 10.10.2.45 Mozilla/5.0+(Windows+NT+6.1)+AppleWebKit/537.36+(KHTML,+like+Gecko)+Chrome/35.0.1916.114+Safari/537.36 404 0 0 140
From the logs it is clear, that if short URL is disabled the title is escaped, but if short URL is enabled, it is not escaped (and probably in wrong encoding).