Undefined keyboard character problem

Hi,

I'm using Lyx 1.3.4 on OSX 10.3.4 to typeset my thesis.  I've hit a 
problem where references included from BibTex cause this error :

Package inputenc Error: Keyboard character used is undefined
...nder, M~J. Aziz, E.~Mazur, and F.Y. G^^8e
                                                 nin.
You need to provide a definition with \DeclareInputText
or \DeclareInputMath before using this key.
(cut and paste from error box)

There is no junk in the BibTex entry that I can see, so I'm assuming the 
problem to be the accents on characters in names. A quick google search 
didn't turn up much information on how to solve this.

Any hints appreciated.

cheers,
Dave