In case it helps the next guy, a workaround, suggested by the author of
the envlab package:
For each problem character, place a line like this in the preamble:
\PrerenderUnicode{\"o}
and enclose each such character in {} where it is used in the body of
the document:
Gr{\"o}nstr
We successfully used the actual unicode character, rather than a the \"o
construct, in both places.
De