users registering with spaces in their username

Just like my username on here has spaces and is correctly displayed as “Things and stuff” I would like to be able to do the same on my local community blog.

Currently, the dev site is almost entirely stock and does not allow users to register with spaces (or capital letters).

I can however, as an admin, create new users with spaces and capitals in their names. Unfortunately, the spaces seems to cause a big problem to where it turns into dashes (i.e. Things-and-Stuff) and then it is impossible for the user to log on.

It is my understanding that newer releases of wordpress are much stricter with usernames, but I would like for someone to shed some light on what code to modify in order to freely allow spaces in user names?

Thanks!