This problem is related to Python on Windows. I fixed it like this:
In Splunk install directory, there is a Python-2.7 directory. Go to Python-2.7\Lib, find mimetypes.py. Inside mimetypes.py find function read_windows_registry(). In this function, replace UnicodeEncodeError or UnicodeDecodeError with UnicodeError. Restart Splunkweb and it will start.
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