Yeah it's a heavily modified version of that keyboard. I assume you are talking about the "hide keyboard" button? By default it's a smilies button instead of close keyboard but you can disable "smilies hack" in the settings to change it back to close keyboard and you can also set a gesture to close it, ie swipe down to hide keyboard.
HTC_IME mod I've been raving about in this thread does do this. That's the only way I ever insert a space. It may be an option that I enabled and don't remember enabling, but it def does it!
I just switched to the X from iPhone. This is my first Droid and I was having the same issue with the space and period as discussed here. I followed Gimpstas advice and the HTC IMC is definitely much easier. Bigger space and easier to use. Also adjusted the delay on # to 250 ms and it is much easier than anything else I've used. Only little thing I'm noticing so far is it doesn't auto capitalize after a period, but that is probably a setting I missed somewhere.
Also auto capitalized I, I'm, I've, which the regulations X keyboard didn't do.
