I would look at using the KeyPress event on the textbox and set e.Handled=true if the key was a spacebar (e is the KeyPressEventArgs for the event handler). Your code might look something like this:
private void TextBox1_KeyPress(object sender, KeyPressEventArgs e)
{
e.Handled = e.KeyChar == ' ';
}
By setting Handled to true, this character won't be reflected in the textbox. BTW - please name your variables better than the default values that VS gives you. TextBox1 won't seem too bad to you now, but will you remember what it's for in 6 months time?