Hmm, tough. I have tested on Ubuntu desktop and windows laptop, but not on a Linux laptop. Hard to debug, without knowing what Linux-disto and hardware you’ve got, but I’ll try to figure out how to fix it.
Fedora 44 with Gnome 50 on a Framework 12 laptop.
I figured out the problem though. I had the "disable touchpad while typing" setting toggled, and of course, it registers the holding-down of spacebar as "typing" and dutifully disables the touchpad. If I untoggle that setting, it works.
Might be worth finding a way around it. I imagine that's a popular setting to have activated.