My applications store all localized text in a string resource dictionary as suggested here http://msdn.microsoft.com/en-us/library/bb295251(VS.85).aspx
UPDATE: updated answer - better option
The XAML parser normalized whitespace according to the following rules.
http://msdn.microsoft.com/en-us/library/cc189036(VS.95).aspx#whitespace
To instruct your sys:String to preserve whitespace, apply xml:space="preserved to it:
sys:String
xml:space="preserved
this is my resource