This is expected behavior in VaultWiki. The spaces occur due to vBulletin's word-wrapping function, which is not correctly applied everywhere in vBulletin due to a few bugs in vBulletin. In VaultWiki, we fixed a lot of the bugs in word-wrap so that it can be applied where it needs to be applied. But due to the original vBulletin bugs, you will not always see the same behavior in a regular forum post.
Word wrapping is a server-side attempt (doesn't always work) to prevent a very long string of text from extending outside the box the text is inside -- from both overflowing out of the sides and from getting cut off at the edges. There is no way to know ahead of time how big the container will be, so the server chooses an arbitrary maximum number of characters before forcing a space.
There are some places where word-wrap is not allowed. CODE tags, PHP tags, HTML tags are just a few of these places. If you are getting extra spaces inside a CODE tag, please post an example CODE tag that shows word-wrap interference so that we can reproduce it.