Let's say I have this
This text is encoded in UTF-8.
This character "š" is read like "sh" in english.
XTDE1200: Failed to read input file file:/C:/file2.md
(java.nio.charset.MalformedInputException): Input length = 1
As Martin says, the evidence you have provided suggests that the file is encoded in Windows-1252, and that
unparsed-text('file.md', 'utf-8') is therefore right to reject it.