Thanks fellows, with your help I discovered the problem to be in the text that I was pasting into my Moodle site which by the way is running on Linux as well as my client running Firefox 13.0.1.
I was able to get some Nepali text from http://code.google.com/p/nepaliconverter/, paste it into the site and read it fine - even into the ASCII fields. I believe the problem was that the text that was sent to me from my Nepali friend was actually not Unicode (even though it appeared correctly in his e-mail). It did paste into the Moodle TinyMCE fields nicely but would not paste into the ASCII fields.
Anyway, my problem is solved and I now have a better understanding of non-English issues and Unicode - thanks to you both.
Ray