It appears that the path to tectonic is not properly quoted before it is passed to the shell for execution in the watch command. See an example below. Note that I translated the actual error message because I was unable to change the UI language for the error message.
> tectonic -X watch
note: "version 2" Tectonic command-line interface activated
[Running `C:\Users\Markus Haug\scoop\apps\tectonic\current\tectonic.exe -X build`]
Command "C:\Users\Markus" could not be found.
[Finished running. Exit status: 0]
It appears that the path to tectonic is not properly quoted before it is passed to the shell for execution in the watch command. See an example below. Note that I translated the actual error message because I was unable to change the UI language for the error message.