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Product, version and build: 5.5.154
32 or 64 bit version of product: 64
Operating system:
32 or 64 bit OS: 64

#search directory and store uin.mdb into variable
$test = (get-childitem "C:\ROWriterData" -Recurse -include ?????.mdb -Exclude "Ishop.mdb") | select name
$test2string = $test | Out-String
$testtrim = $test2string.Trim()
$testrefine = $testtrim.Remove(0, 286)

#create registry entries
New-Item -Path HKCU:\Software -Name "Progressive Automotive Systems" –Force
New-Item -Path "HKCU:\Software\Progressive Automotive Systems" -Name "R.O. Writer" –Force
New-ItemProperty -Path "HKCU:\SOFTWARE\Progressive Automotive Systems\R.O. Writer" -Name "DataPath" -Value "C:\ROWriterData" -Force

When I compile this with setting in the attached screen shot it add's spaces instead of removing them.

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Trim only removes the leading and trailing spaces of a string. If you want all spaces removed, use the following line:
$test2string = $test2string.Replace( ' ', '')

From your post it is not really clear where you see spaces added.
Packaging does not modify your code, so I am not sure how spaces would be added.

When I compile it as a EXE and then run it, then it puts extra spaces inside of the Registry creation. Any suggestion to why this occurs?

You will have to be a little bit more specific. Extra spaces where precisely?