Raven, another well though out and correct reply.
I plugged in another keyboard and same result but ... If I press the space on keyboard A and the arrow keys on keyboard B then it works.
This just confused me even more, so I got out a screw driver and a multi meter!
The spacebar seems to bridge all 4 lines and prevents certain keys from registering but a bit of research on keyboard wiring I think I have figured it out, most keys need access to a line in case a modifier key is pressed space being among the exemptions, the voltage varies a little from key to key but it appears under certain conditions space will lock out other keys and vice versa, I'll just change my fire button key and call it a hardware limitation.
The spacebar resistance was a little unpredictable I use some switch cleaner but it was still not exactly a reliable, it could be worn or may the variable voltage is how the space bridges all 4 lines, I don't know, its a clever system tho.
A lesson learned, when using multiple key input ALWAYS use keys accessible from modifier keys, up to 4 key at once seems to be stable but 5 and I got the same results with some keys taking precedence over others.
Another lesson learned, I have to buy some new equipment!!
EDIT: Yes, soz didn't see your posts, as you say its the old hardware, I tested it the old skool way lol