@Joel Cherney might have better insights but here's what I think is going on
I think it's a quirk of how Data Merge handles text encodings. When you import the first UTF-16 file, InDesign caches the encoding and file structure internally. Even if you remove the data source, it doesn’t fully reset that cache. So when you try to load the next UTF-16 file, it often won’t re-read the encoding properly.
A couple of workarounds:
Save and close the document after removing the first data source, then reopen it before importing the next file.
Or give the new data file a different name before importing it (InDesign treats it as new and reloads it cleanly).
Stick to UTF-16 LE with BOM for consistency.
If you’re just updating data, you can overwrite the existing file on disk and choose Update Data Source instead of removing and re-importing.
I don't think it’s your font or file format causing it, I think it’s InDesign keeping old import settings in memory.
