What strange characters are you getting? Do you mean DragMath is generating strange characters or when Moodle tries to convert DragMath's output to math notation it displays strange characters instead of math?
By the way: xmlrpc is used in Moodle networking ('rpc' stands for remote procedure call).
There are a number of places that you could be speaking of (i.e. strange characters in the DragMath interface, as inserted in your editor, or as seen after you save in the editor and display. If you could zip up a set of three screen captures at each stage that would be helpful.
Also, display can be effected by a number of different variables depending how you are doing display and in what format you are inserting the constructed equation. For example, if you are using DragMath to insert asciimathml vs MoodleTex, as asciimathml will try and render using MathML which relies on local fonts. Check your browser as well to determine how it is encoding (i.e. UTF-8?)
This is another reason why it would be helpful to have the4se math display and construction technology available in Moodle docs and forums..... please vote to support those efforts, as well as the initiative to put these in Moodle core!
according to the installation documentation (http://docs.moodle.org/en/DragMath_equation_editor ), it is suppose to look that way (out.gif). but i would like it to make it look just as it is in input.gif after inserting.
-installation of asciimathml is done
-enabled Tex notation and algebra notation from moodle.
That's exactly what it should look like. Those doubledollars are needed for tex filter to render equations and you should just make sure that tex itself is working on your site (some distribution of latex is installed and correct paths set up to tex filter administration or executable mimetex file has correct permissions to produce gif image from the code that TeX filter translates). If you want to add equations using asciimathml try delimiters `...` and asciimathml will convert the equation to mathml or image fallback.
Htmlarea can't render TeX WYSIWYG.
You could also disable algebra filter. If your site does not render any TeX start debugging for example from http://moodle.org/mod/forum/discuss.php?d=113071
There are a few possible reasons why TeX filter does not always render images.
var AMTcgiloc = "http://someserver/cgi-bin/mimetex.cgi";
supposing you have a script called AsciiMathML.js (name can be different) in folder lib/editor/common/AsciiMathML.js and http://someserver/cgi-bin/mimetex.cgi is used to render image fallback.
Please note that I posted a new dragmath zip that includes the ability to eliminate the implied dot in multiplication.
Also remember that dragmath can export in a number of different formats.... you can export in MoodleTex (the previous default) which produces Tex delimited by dollar signs, in asciimath (which produces asciimath notation delimited by backticks) as well as others and is extensible using the xml files along the lines of the xml files that are included in the distribution.
You can also edit the existing xml files. for example, if you wanted to use dragmath tpo produce equations tagged with <math>...</math> or amath...endamath you can change the existing tokens (for example, you can create a new xml file with different tokens, and then add that xml file to the list of files in the dragmath config file.....)