Sounds like a bug in the way squirrelmail is handling the MIME encoding (or poor encoding from the sending email client). There's probably little you can do about it unless you find a fix on squirrelmail's site.
No, the problem sounds like winmail.dat. Google it, but in a nutshell if someone sends a file using Outlook it cannot be read by almost anything other than Outlook as they change the file name and send it as a TNEF file.