See the example here: http://xopusfiddle.net/2i1UK/2/
Both the <code> and <fragment> elements include the xml:space="preserve" attribute and are referenced in the XSL:
<xsl:preserve-space elements="code fragment">
Notwithstanding this, you can insert multiple spaces in code <fragment> elements and they will be accepted, but you cannot insert multiple spaces in an inline <code> element.
When the document is loaded into the editor, multiple spaces are stripped out of code elements but preserved in fragment elements.