Hello,
The latest update of Workbench includes support for spaces in project directories and toolchain directories (where Device OS is installed). Local compilation now works in case the Windows user directory has a space. When compiling, a directory like C:\Users\Example Name\Projects\widget will become C:\Users\EXAMPL~1\Projects\widget
Path with spaces are still not supported on Linux and Mac as a similar workaround is not possible.
Let us know if you still run into issues with local compilation on Windows.