Try explaining this feature to your 83 year old Grandmother.

Try having her write down these steps and do all of the details.. The feature is poorly implemented.

The first time she tried it, she selected all the icons on her desktop and then invoked all apps simultaneously when she pressed the space bar.

That crashed her macbook.

I was having the same problem as you until I read the instructions in the article a few times.
IMO the implication is that the process will work it’s way through all the images in a folder if you select just the first one.
Not so.
You have to select all the images you want for the slide show.
So in a folder full of images do Cmd+A to select them all.
And now you can use the keys/gestures as mentioned in the article.
Hope this helps.
In the end it was just a case of interpretation of the instructions given and you and I did that the same way.

To close it out, you can hit escape and it leaves you with your folder with a black background or hit spacebar and you are back to your regular desktop.

Cheers

i have OS X 10.8.1 installed and when i hit option+space on a folder with photos the slideshow opens but only options available are “Add to iPhoto” “Exit fullscreen” and “Close”.

does it only work if images are on desktop?