Enhance error handling and Windows compatibility in failure handler a…

…nd process wrapper

hstest/testing/process_wrapper.py

@@ -1,5 +1,6 @@
 from __future__ import annotations
 
+import os
 import subprocess
 import sys
 from threading import Lock, Thread
@@ -67,6 +68,14 @@ def start(self):
 
                 args = ["cmd", "/c", *args]
 
+            # Set environment variables for proper encoding on Windows
+            env = os.environ.copy()
+            if is_windows():
+                env.update({
+                    'PYTHONIOENCODING': 'utf-8',
+                    'PYTHONLEGACYWINDOWSSTDIO': '0'  # Disable legacy stdio behavior on Windows
+                })
+
             self.process = subprocess.Popen(
                 args,
                 bufsize=0,
@@ -75,6 +84,8 @@ def start(self):
                 stderr=subprocess.PIPE,
                 stdin=subprocess.PIPE,
                 encoding="utf-8" if not self._use_byte_stream else None,
+                errors='replace',  # Handle encoding errors gracefully
+                env=env
             )
         except Exception as e:
             from hstest import StageTest