I'm one of SubGit developers and as I know there's no problem when directories names contain spaces.
If you have spaces in branch names, use spaces in the config file:
branches = branches/branch with space:refs/heads/branch with space
excludeBranches = branches/branch to exclude
Well, if the space is the last character, you have to put the value in quotes because Git config format requires that:
branches = "branches/space at the end :refs/heads/spaces at the end "
I would also note that Git does not allow spaces in the branches name and physically in the Git repository it will be encoded to '+':
refs/heads/spaces+at+the+end+
but in the config you specify its version with spaces.
Also you can use just spaces in excludePath/includePath options:
includePath = /directory with space
excludePath = /directory with space/subdirectory with space
If you have other problems or questions, leave a command, I'll update the answer then.