**UPDATE**
When I deleted serbian from localization directory, and clear [sr] entry from index.inc, i can login normally, like nothing happened. Which brings me to conclusion that something is wrong with translation file. I'll check file and then get back to you.
**UPDATE 2**
I didn't figured out what extactly was wrong with my translation files (messages.inc, labels.inc), but i rewrote them from scratch, using UTF-8 encoding, reuploaded, and everything works like a charm!
Nipon, you can try that, instead of losing nerves looking for problem.
Peace