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Well, I got the same problem, but using the tags in module name doesn't seem to help.
I noticed that after I typed module name [en]ModName[/en][zh]ChineseModName[/zh] and proceed to the confirm page, the module name is already decoded based on current language setting. If I enter the tagged module names into database table directly, it works. But once you go to Amdin-> System->Module and save the name even without chage it, the name is decoded again.
A few details
XOOPS is a 'official' Chinese version 2.09
xLanguage ver 2
I have another website with'generic' XOOPS v 2.0, plus a language hack someone posted here a year ago. The same approach is used for module name and it works fine for Chinese and English.
I don't know how much is the difference between Chinese version and the 'generic' version, or if it makes the difference at all, in terms how module names are saved.
Can someone help?