If you did a clean install of Lion at any point you might have noticed that the spacebar won’t toggle the checkbox and tab won’t cycle through the options in the Logout window.
To resolve this, open Terminal.app (Applications > Utilities > Terminal.app) and copy/paste this command
sudo defaults write NSGlobalDomain AppleKeyboardUIMode -int 3
Press ‘return’ and type in your Admin password. Restart your computer and your tab and spacebar keys should be back to normal!