Spaces in filenames for files on your web server are a bad idea… No question about that, but sometimes you don’t have control over the files you want to link to.
So let’s assume you create a PDF file that contains a link to another PDF file on a web server, and that second file just happens to have a space (or another special character) in it’s filename. You plead to the web master, but all begging has no effect, the filename stays the same. So, you create your link in Acrobat and test the file out with your browser and Acrobat installed and everything looks fine: Acrobat actually escapes the spaces correctly – it replaces every space with the sequence %20.
This is starting to look good – and easy. But once you test it with Reader XI, things are not looking as bright anymore. All of a sudden, there is more going on than just the replacement of spaces with %20 – we end up with the space character being replaced with %2520.
When we look up what %25 stands for in the list of URL encodings, we see that %25 is the encoding for the percentage sign: It looks like the URL got encoded twice: In the first round, the spaces got replaced with %20, and in the second round, the percentage sign (the first element of %20) got replaced with %25, so we end up with %2520 for every space in the original URL.
This is a bug in Adobe Reader, and unfortunately we need to wait for Adobe to fix this. There is however a workaround: When you turn off protected mode, the links start to work. To turn off protected mode, go to Reader’s Preferences and select the “Security (Enhanced)” category when using Reader XI, and the General category when using Reader X, then uncheck the feature “Enable Protected Mode at startup”. Restart Reader, and give it another try, it should be working now.