go go /home/cabal and open .bash_profile and add the following line next to the other exports (or at the bottom):
export FREETDS_UNIXODBC_CHARSET='cp936'
I did this in my Cabal profile as well as my normal user (i use this linux box for other things too).
That bit is only on the linux side though and won't fix the problem with restoring the database. I had lots of east asian language packs installed (Korean, Japanese and Chinese mainly) way before i installed the sql server (2005 express), and i have them all ticked on the Advanced tab of my regional and language settings (in control panel) too which might be the difference. it may be that the server picks up supported languages when it is installed as i didn't change any language settings in sql. The databases themselves are stored with a Chinese_PRC_CI_AS collation so your sql server must be able to accept that language or the import will fail.