It's the font. I see the same thing when I change the tree to use that font.
It looks like there is a space there, but the font's kerning is set up so a space after an O character is very narrow.
The tree and file display may use slightly different APIs to render their fonts, which is why it doesn't happen in both places. (In fact, if you push F2 to edit the folder name in the file display, it happens there as well when using the same font.)
Change to another font. That one's no good. 