The Encoding setting is needed by non-english writers, who uses accented letters and other locale specific details, so the target document Character Set must be customized (if allowed).
The valid values for the Encoding setting are the same charset names valid for HTML documents, like iso-8859-1 and koi8-r. If you're not sure which encoding you should use, try utf-8. If that doesn't work, this complete (and long!) list should help.
The LaTeX target uses alias names for encoding. This is not a problem for the user, because txt2tags translate the names internally. Some examples:
| txt2tags/HTML | > | LaTeX |
|---|---|---|
| windows-1250 | >>> | cp1250 |
| windows-1252 | >>> | cp1252 |
| ibm850 | >>> | cp850 |
| ibm852 | >>> | cp852 |
| iso-8859-1 | >>> | latin1 |
| iso-8859-2 | >>> | latin2 |
| koi8-r | >>> | koi8-r |
If the value is unknown to txt2tags, it will be passed "as is", allowing the user to specify custom encodings.