When you use Test-Path to check whether a file or folder exists, be aware that spaces resolve to the current path.
So this line always returns true:
Test-Path ' '
In fact, it points to the current path. The next two lines produce the same result:
Resolve-Path ' ' Resolve-Path .
It looks like this is a bug in the underlying filesystem provider code. It may cause unexpected results when a path variable accidentally contains only space(s).