Maybe the error is here:
// Use of 'utf-8' is recommended for multi-language sites
$_CONF['default_charset'] = 'latin1';
I was told that the latest MySQL supports this 'default_charset' whereas the old one just ignored it.
What did you have in these positions on the old server with MySQL 4?
$_CONF['language'] =
$_CONF['locale'] =
// Use of 'utf-8' is recommended for multi-language sites
$_CONF['default_charset'] =
Did the hoster say the old system was 'latin2' as default?
Do you have access to the old system? Can you convert it into utf-8 there and see if it works? Afterwards go to the new system? There are so many variables in it.
I have this now and it works:
$_CONF['language'] = 'german_formal_utf-8';
$_CONF['locale'] = 'de_DE.UTF-8';
// Use of 'utf-8' is recommended for multi-language sites
$_CONF['default_charset'] = 'latin1';