In a C application on Windows, at least on MSVC 2010 and Windows 7, do this:
wprintf(L"Test\n");
Py_Initialize();
wprintf(L"Test\n");
Output is:
Test
T e s t
I was able to track the issue to fileio.c to the following code block by searching where wprintf breaks:
if (dircheck(self, nameobj) < 0)
goto error;
#if defined(MS_WINDOWS) || defined(__CYGWIN__)
/* don't translate newlines (\r\n <=> \n) */
_setmode(self->fd, O_BINARY); <----- breaks it
#endif
if (PyObject_SetAttrString((PyObject *)self, "name", nameobj) < 0)
goto error;
This can be easily confirmed by adding wprintfs on both sides of _setmode.
This issue was also raised at http://mail.python.org/pipermail/python-list/2012-February/620528.html but no solution was provided back then.