Actually it handles spaces fine, it's double spaces it can't handle. Any problems with folders that don't have double spaces are the fault of the scripter, not Khaled.
Krayzee: If you use $shortfn with a file that doesn't exist it doesn't shortern the file name, do as theRat said and enclose the filename in quotes. You will also need either the -a or -o switch, i.e.
/hsave -a Hashtable "C:\mirc\system files\htable.hst"
Hope this helps