Issue: When creating an article with the α sign in the title, the α is stripped from the title.

Stripped from the title or just the URL, or both? The following article seems fine to me: http://www.vaultwiki.org/demo/Title-hαs-an-α

If the forum is not UTF-8 charset, then VaultWiki strips non-alphanumeric characters from the URL to prevent charset translation issues where the matching article can't be found because there is a discrepancy between the charset used in the request and the charset used to save the article. This should not affect the appearance of the title itself, only the URL.

Stripped from the url at all times. The title keeps changing. At this time its replaced by α in the forumdisplay title. The title in the wiki has it replaced by the letter I. As the article is currently the last posted, it also shows up on forumhome with the correct title.
I added a redirect to the article, but now thats also gone. Its quite confusing.

This is because it's a double-byte character, and your forum's character set is ISO-8859-1 which is not double byte, so the forum interprets each byte as a literal character after you save it. If you are copying the character from another site or a clipboard, make sure that the source is also ISO-8859-1 so that you are pasting in the correct character code for that set.

Using ISO-8859-1 instead of unicode by default was a terrible choice by the developers of vBulletin 3 as it severely limits the number of characters that are acceptable and makes copy and paste of some characters much more complicated than it needs to be. If you are copying from another web site, it MIGHT work if you use your browser to force the source page to load in ISO-8859-1. Since the browser also knows the original character set, it should be able to perform a translation.

However, for character codes with U+0000, each 00 is an individual byte and only characters that use only the back 00 up to FF have 1 to 1 translations. Some character codes have no translations in non-unicode character sets.