"C:\Windows\Fonts" is where font file "Arial.ttf" ought to live. By default, PMS will use this font, so you wouldn't have to set it specifically.
You could try settings the Central European Windows code page
, by opening the tab "Transcoding Settings", click "Common Transcode Settings" and select tab "Subtitle settings".
There you will find "Codepage for non-Unicode subtitles". Select "cp1250 /* Windows - Eastern Europe */" and save the settings.