This is a (known) regression in PSReadline, PowerShell/PSReadLine#719, which was updated in 1809. That regression was fixed with PowerShell/PSReadLine@3229956. Unfortunately, the console team doesn't control the speed at which PSReadline is ingested into the OS.

@SteveL-MSFT may know more.

There's a clever workaround that you can insert into your PowerShell profile to work around it in the meantime.

# Work around an RS5/PSReadline-2.0.0+beta2 bug (Spacebar is not marked 'essential')
Set-PSReadlineKeyHandler "Shift+SpaceBar" -ScriptBlock {
        [Microsoft.Powershell.PSConsoleReadLine]::Insert(' ')
}

Great, thanks for the very fast response.

PSReadLine in Windows will be updated for next release of Windows. In the interim, it appears the fix for this is in the beta.3 release which you can install from PowerShellGallery today.

install-module psreadline -scope currentuser -allowprerelease -allowclobber -force

This is still happening on 1909. @SteveL-MSFT did the fix not wind up in the "next release" as planned? I'm on Microsoft branded hardware (Surface Book 2) with no available Windows updates showing.

(If it's not in the current release, and the terminal team doesn't control when the PSReadLine package gets updated, who does control that?)

ETA: this Superuser post suggests it was fixed at one point, then re-broken?

This bug is also affecting Windows 10 Pro version 2004 (build 19041.388). This issue should be reopened.

I am not reopening a bug that's doesn't represent something my team can fix. If you have a grievance, please move it to the PSReadline repository.