according to the readme.txt:

Note anyone wanting cyrillic characters or having issues with languages in chat must disable wordwrap.
One can do that by going to
~/freichat/server/freichat.php
Search and comment the following line:
$message=mywordwrap($message);
It should look this way:
//$message=mywordwrap($message);

but I searched ~/freichat/server/freichat.php and could not find
$message=mywordwrap($message);

the chat is working just fine but when i chat with others in arabic, hebrew or chinese and some other languages i only see ???

This version is not supported anymore, Please download and install latest version of FreiChatX

could you please tell me which version i'm using?
it's the version that came with elgg 1.8 plugin and you posted a comment on that forum

if you want the latest version then download it from this site, but installation is a bit different from the plugin provided by elgg.