Asset name with spaces

For instance, if the asste name is "abc def.png", Is this okay to upload as is, or should I be changing the name?

Check the naming conventions here: Naming conventions for assets

Does this mean I need install any service packs?

What is your AEM version?

It is recommended to be always on the latest service pack to avoid running into known issues.

We are on 6.4.4. However I am worried about any indexing challenges we might get with it.

We ran into a recent issue of resource resolver and Externalizer being used in the same code and they are encoding the path twice. So "abc def.png" is becoming "abc%2520def.png" instead of "abc%20def.png". Do you think that is an issue with code or could possibly be because of the spaces?

Note : We have a lot of assets with spaces? Should we consider renaming them?

You can have assets with spaces in their names.

As far as %2520 is concerned,

The common space character is encoded as %20 . The % character is encoded as %25.

The way you get %2520 is when your url already has a %20 in it, and gets urlencoded again, which transforms the %20 to %2520.

https://stackoverflow.com/questions/16084935/a-html-space-is-showing-as-2520-instead-of-20

As Vish.dhaliwal recommended, you should install latest SP to avoid running into known issues. You can find it here:

AEM 6.4 Service Pack Release Notes