I am getting this same error on an INSERT from SQL Server 2005 (64-bit) using PGNP-126.96.36.1992.exe. Here is my statement that references the linked server.
insert into [openmfg-test].[openmfg-test].api.contact (first,middle,last) VALUES ('rebecca','test','shapiro')
OLE DB provider "PGNP" for linked server "openmfg-test" returned message "ERROR: invalid byte sequence for encoding "UTF8": 0x80
HINT: This error can also happen if the byte sequence does not match the encoding expected by the server, which is controlled by "client_encoding".
Msg 7343, Level 16, State 2, Line 1
The OLE DB provider "PGNP" for linked server "openmfg-test" could not INSERT INTO table "[openmfg-test].[openmfg-test].[api].[contact]".
The database server collation is SQL_Latin1_General_CP1_CI_AS