Here is how you can get to the problem:
1. Create a project in a location that contains whitespace. For example, on
windows, "C:\Documents and Settings/Administrator".
2. Create a schema (XSD) file, say PO.xsd in some package.
3. In the same package, create a XML file, say PO.xml and in the wizard, choose
PO.XSD as the document type.

Here is how PO.xml looks like:
<purchaseOrder xmlns='http://xml.netbeans.org/schema/newXMLSchema'
  xmlns:xsi='http://www.w3.org/2001/XMLSchema-instance'
  xsi:schemaLocation='http://xml.netbeans.org/schema/newXMLSchema
   file:/C:/Documents and
Settings/Administrator/JavaApplication1/src/javaapplication1/newpo.xsd'>  
</purchaseOrder>

When you validate this xml, it doesn't work because it cannot find the schema. 

As per schema spec, http://www.w3.org/TR/xmlschema-0/#schemaLocation, the
attribute schemaLocation can specify multiple namespace+schema pair separated by
whitespaces.

The wizard should generate proper URI for the schema in schemaLocation.