bwnbwn - 8:08 pm on Jan 11, 2011 (gmt 0)
I am seeing them as well on a couple sites. It looks like the bot is indexing the urls incorrectly and reporting it in sitemaps as the problem. All the bad urls are hitting the custom 404 page due to me not allowing any spaces in our urls. These urls are not in the sitemap but this is were Google is saying the problem is. I am doing nothing because there really is nothing I can do.
It is best to 404 them.
I think the bot has hiccups and adds the spaces when it gets a case of the hiccups, because it is only a few sites with the issue and not all of them.