Here's what's happening:

1. In the chatbox, if a character name has a space in it, the game prints it using using U+00A0 (non breaking space) rather than the usual U+0020 space.
2. Chat logger logs this verbatim, which is a reasonable behavior (as it's exactly what the game printed). However, this makes it quite annoying to search chat logs in grep/vim/etc because U+00A0 doesn't match U+0020.

As an example, I isolated a line from one of my logs:

$ cat example.txt
10:55:00 To Small�Luna: Test
$ hexdump example.txt
0000000 3031 353a 3a35 3030 5420 206f 6d53 6c61
0000010 a06c 754c 616e 203a 6554 7473 0a0d
000001e

Which translates to this:

(ignore the endian-ness - the main thing to note is the use of 0xA0 inside "Small Luna")

What do you think about simply replacing all U+00A0 with U+0020 in the log output?