I've had the same issue with setting up emacs in a terminal on my desktop G4. Seems the OS doesn't allow a control and space to be a separate event. It took me ages to figure out why Ctrl+Space didn't set the mark in emacs.
So, short answer, you'll have to pick a different key combo, without the space bar.
Mini1: Vostro A90, Black, 2G, 1.3 Webcam, Bluetooth, 64G SuperTalent, OS X 10.5.8
Mini2: Mini9, Black, 2G, 0.3 Webcam, Bluetooth, 32G RunCore, OS X/Win 7,
internal PCI-e SHDC Reader
Mini3: Mini10v. Black, 2G, Webcam, 500G HD, OS X 10.5.8 [Hibernate w/NBI 0.8.3 RC4]
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