If the space bar is not working still, you may have a hard ware issue. This test will tell you for sure.
Boot in to Open Firmware (apple+option+O+F on restart), once you get to the white screen let go of the keys and simply test the keyboard. If the space bar works, you need to do and Archive and Install Preserving user and network settings (assuming OS X 10.2 and higher). If the space bar still does not work, reset the PMU and to the test again.
If the issue still persists after that, you have a hardware issue.
type "mac-boot" to restart the computer (minus quotations)
This is all assuming that you are not using an Intel Mac.