When using Midnight Commander with the default settings of PuTTY connected to my Ubuntu Linux machine the line drawing characters are all messed up.
After some experimentation it turns out that to fix it all you have to do is change your character set in PuTTY to UTF-8 and the problem is fixed. To do this open up the PuTTY settings and go to Window->Translation->Received data assumed to be in which character set: and change it to UTF-8.
After making this change you might have to force a redraw of the mc screen to show the new line drawing characters:
Also not that some fonts might not have the line drawing characters available. The fonts I know work is Courier New and Lucida Console. To change your font go to Window->Appearance, Font settings and click the Change button.
For reference, I was using using Midnight Commander 4.6.1 running on Ubuntu 7.10 and using PuTTY 0.59