You need to change the encoding from DOS cp437 (assuming English codepage) to Latin-1 or utf-8.

use Encode;

my $result = `ping -n 1 "jenda.krynicy.cz" ` . "\n";

print "result: $result\n\n";

my $latinresult = $result;

Encode::from_to($latinresult, 'cp437', 'iso-8859-1');

if ($latinresult =~ /zeitüberschreitung/i) {
    #ping timed out, something is wrong with the repository
    print "Ping timed out for $domain: \n\n $result \n\n";
} else {
    #good repository.    
    print "$domain passed ping: \n";
    print `ppm repository add $repository $location` . "\n\n";
}
[download]

Note: this only addresses the encoding problem, there are several other potential problems with the script