@Erel, is this fixed? I've just received my ESP8266 and am finally trying B4R out. My project will not compile if tehre is a space in the projects folder name. I'm using 1.2 Beta 2. Projects compile fine if there is no space.
Just an FYI but simply running the command mentioned in the link above (ie
fsutil 8dot3name set D: 0) will not resolve the problem.
This only enables 8.3 name creation for new folders.
If you have an existing path with a space you need to recreate it. I renamed my "My Apps" folder to "My Apps2", created a new "My Apps" folder and then copied my projects across. Only then would it compil