The primary network in my house has an essid of 6563 5221. However the tow parts are separated by a space. So when I type for instance, when I type

iwconfig eth0 essid 6563 5221

I get

iwconfig: unknown command "5221"

of course, 5221 is not a command, it is still part of the essid, but iwconfig doesn't realize this. Should I put the essid in quotes? I thought that was a no-no. What about an underscore?

On a miscellaneous note, are there any different network configuration operations that must be applied with a network that has a hexadecimal key?

Use double quotes. There's an example in the man page that does so. I don't know where you got the idea that doing that was wrong :/.

OR---why not set the wireless router with an essid without spaces?

In re the hex key: Using the iwconfig command, you would use "s:" with an ascii key, but not with hex.
See the man page for iwconfig.