Work around from this thread: http://groups.google.com/forum/#!topic/msysgit/twrVn_EbNI4
cdinto your git install directorycopy mingw\bin\libiconv-2.dll libexec\git-core
(orcopy bin\libiconv-2.dll libexec\git-coreif your installation has nomingwfolder)
In the linked thread Drew asks for assistance, so if you think you can help fix it you might want to reply in that Google Groups thread.
Error happens with these builds:
- msysgit-fullinstall-1.7.4 OR 1.7.6 (and 1.7.7)
- msysgit-netinstall-1.7.4 OR 1.7.6 (and 1.7.7)
- Git For Windows 1.7.6 (but not 1.7.4)