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I have checked this issue with latest build of XVS i.e. 8.11.852 and observed that this issue is working fine as shown in screencast :http://www.screencast.com/t/f8qjRdBJ1
To check this issue first I have create a account having space in its name and then open VS and create a template of android application in VS and build it. It builds successfully.
Could you please check it with latest build of XVS, as of now I am closing this issue, please feel free to reopen it if you are getting this issue again.
Mohit, can you please verify this issue in xma 126.96.36.1997 as well?