I just tried it, and it saved fine in a folder with a space in the name. Make sure you know exactly where it's being saved. i got fooled the first time I tried.
I just noticed something else. The problem was not because there was a space in the folder name, but a accent letter. Then Timeline saved the csv file in a new folder with a name that was equal to the original folder, but the accented letter was changed for a special character. (e.g I chose to save in the "Naïve" folder. but Timeline created and saved the file in the "Na%ve" folder.