Needs to be reproduced on current canary release. 
David, can you see if this is still an issue?

1. tab through the menu until you are on the search field. Hit enter then type in a hangout with a space e.g. "hi hi"

2. tab down to "Add a hangout" and hit enter.

You'll see a spinner for ~ 30 seconds, then nothing.

If you click "Add a hangout" with the mouse, an immediate failure message is shown as expected since the hangout name had a space in it. 

I'm having some trouble confirming, but it seems like there's a difference in behavior for a valid hangout as well.