I have SQL 2000 table with varchar data column. Text data in this column may contain more than one seriated spaces. This table is used as data connection in Infopath and a repeating table is used to display data. Nothing unusual. Then, when the form is previewed, the data looks like "normalize-space" function was applied. I suppose it must be an option to turn this feature off, but I haven't found anything.
Furthermore, you should not try data connection to check it. Now I just created new blank form, add a text box and typed such kind of text. The result is the same.
I use Infopath with SP2.