I think the 2nd arguement thing was missing a parenthesis, i got it to save by putting brackets like so (took out the quotes in forumid as well, which may or may not be correct)
HTML Code:
<if condition="(THIS_SCRIPT == 'indexTAB' AND (in_array($forum[forumid], $GLOBALS[tabcats]) OR in_array('all', $GLOBALS[tabcats]))) OR (THIS_SCRIPT == 'forumdisplay')">
Doesn't mean it worked though

still got the encoding error