Well, that's been an interesting exercise... ** ***
Leaving everything else aside, I can confirm that FPC 3.2.0 on Go32V2 running directly on i386 hardware (Sony Miaow laptop) renders all characters and character positions correctly, in particular the menu that you showed in your posting.
So I'd put my money on this being a problem in a library or BIOS facility used by multiple x86 emulators. ****
** The reason I was interested in looking at this was that I wanted to see how nicely FreeDOS played with other OSes etc. So far, I suspect that most of the problems I've seen were down to misinterpreted sector addresses, i.e. LBA vs non-LBA partition table entries, but things were hardly helped by- at one point- my thinking that I couldn't boot the FreeDOS CD and inadvertently having my drive letters messed up by the USB loader on floppy. This really takes me back to messing around with LILO 25 years ago...
*** I must admit that I've got a weakness for reimagined OSes. One of the nicest I've come across was IBM's VM/CMS, where the mainframe card reader and punch had been quietly turned into an inter-user messaging system.
**** I think this is the first time I've played with a DOS extender since about 1989.
MarkMLl