So the encoding was probably not the problem

The main problem was most likely that your text was full of nonbreaking spaces. A conversion to actual ASCII would have got rid of those because the (rather limited) ASCII character repertoire doesn't include nonbreaking spaces. I doubt that using an "ANSI" character set did that, though, so yes, the encoding was probably a red herring.

does the GUI read ASCII and ANSI?

What GUI?

what encoding is used for copy and pasting text?

That would be an implementation detail of your operating system; if it's competently implemented (which I think pretty much everything is these days) you should think of what's copied and pasted as being made up of characters, not of the numbers used to encode them.

However, at least on some systems, if you copy from one application that supports (not just plain text but) formatted text into another, the formatting will be (at least roughly) preserved. This will happen, e.g., if you copy and paste from a web browser into Microsoft Word. I find that this is scarcely ever what I want. There's usually a way to paste in just the text (sometimes categorized as "Paste Special", which may offer other less-common options for pasting stuff too).