Can you elaborate on "it makes a space instead"? Are you saying it either inserts a space into the filename or it changes the whole filename to a space, or?
it inserts a space after the filename, but before the extention
First time I've heard of the issue but they're not running Mountain Lion here just yet, so that could have something to do with it. If you remove the space in Finder and re-open, when you save it doesn't re-insert the space does it?
unfortunately, it won't even save. So no file is being produced.
Clicking Save or Cancel or pressing the ESC key don't do anything.
The program is still technically responding, but I can't do anything else.
I am no longer having to Force Quit Flash. I've found that I can still access the file tabs to move them in and out of the "maximized" view or whatever that's called and I can close the file from there as well, however I'm still unable to save any ActionScript files.
"file tabs"? I don't recall any file tabs. Are you referring to the project panel or the library perhaps?
As far as writing code at all, have you considered writing code outside Flash in another program? You can even get Flash Builder 4.6 Standard free in certain circumstances (student, unemployed, etc). Unfortunately FlashDevelop isn't available on Mac or I'd quickly point you there. These programs let you write code with excellent code completion that far exceeds the built-in ActionScript editor. I'd give these a try.
Per your situation however, I can't think of any other reason than OS-level permissions that would prevent Flash from writing a file. If it has the permission to write a FLA file then it can definitely write an AS file in the same path. If you can't even save your FLA to a new file then that's a different story.