So the test file actually works. I am surprised that the runtime test yields 'no'.
On another front, what happens when you edit the lyxrc.defaults file to contain \tex_allows_spaces true ?
Does typesetting of docs in directories-with-spaces-in-their-name work?
Yes. (This is in lyx-136.)
In lyx-140, I get the same results: reconfigure incorrectly reports that spaces are not allowed, but editing lyxrc.defaults enables it to work.
Bennett