The answer is yes and no. Yes, the Find and Replace part of RM&C is designed to work on the entire path name of each file. Why? Because it's very useful for doing things like moving a large group of files from C:\Music to M:\some\big\path\to\Music . It can change any part of the path name, depending on what you put into find and replace.
Unfortunately you've found kind of a negative side effect of this behavior. If you *just* did this, you can press undo (control-Z) and it should reverse the changes. But that only works for some short time after you use the tool.
I could help you write a new expression to change all of the periods in the path names to spaces if you'd like. Or I can help you develop another expression that will *only* operate on the file names and change all of the spaces in the file name only to periods.
Let me know what state your library is in and where you want to get to and I can probably help you fix it.
Brian.