I believe this is actually a problem with the UTF8 server you are connected to. As stated earlier, character 160 is often used to feign a space. As a result, IRC servers have started to forbid this byte in channel names (regardless of whether it's part of a UTF8 character!), and the error you are getting is most likely the result of that check. You might want to talk to whoever runs the UTF8 server in order to disable the check.
Edit: just to make sure, this theory is easy to test, as the issue would be entirely mIRC unrelated: see if you get the same error when trying to join the same channel from another UTF8 IRC client.
