A probably related question: XSL FO : Multiple language pdf using french,German and Italian characters
You could have an encoding problem in your FO file, as the special characters you cite are visualized correctly using FOP's defaults, with no particular font configuration.
(I tested using FOP 1.1 and this simple FO file:
<?xml version="1.0" encoding="UTF-8"?>
<fo:root xmlns:fo="http://www.w3.org/1999/XSL/Format">
<fo:layout-master-set>
<fo:simple-page-master master-name="one">
<fo:region-body />
</fo:simple-page-master>
</fo:layout-master-set>
<fo:page-sequence master-reference="one">
<fo:flow flow-name="xsl-region-body">
<fo:block>File contains special characters like ä, ö, ü or ß.</fo:block>
</fo:flow>
</fo:page-sequence>
</fo:root>
)
I would suggest checking the character encoding of your input XML file (probably UTF-8), and whether it is properly handled in the XSLT transformation (if you use code, check if the files are read and written using the proper encoding).