vi can't handle ":! cmd %"

[william.tw0mey]

I'm running System V, R3.2.3 and ksh88d. While in vi editing
foo.c, with shell=/bin/ksh, if I try

:! cc %

I get a message to the effect that cc can't access foo.c.
Now the interesting part is if I try

:!echo % | od -c

I get
0000000   f   o   o   .   c  \n
	346 357 357 256 343 012
0000006

which is the characters for "foo.c" but with the high order bits set.

Is vi/ex compiled incorrectly?

What flags have to be redefined for vi to pass the filename to 
the shell with the high order bits unset?

Thanks,
Bill Twomey, cbnewsj!btwomey attmail!btwomey journey!btwomey