With the use of mustache templates for admin settings the option values are escaped. This breaks the indention with non-breaking spaces (" ") for subcategories in admin_settings_coursecat_select. See the defaultrequestcategory setting under Courses -> Course request.

For dropdown and multi select menus using

 

is the only way to indent options.

One solution would be to adjust the mustache templates setting_configselect and setting_configmultiselect to not escaping the option value. See the attached github branch.

Another solution might be to explicit implement an indention feature to the admin_settings_configselect and multiselect classes, separately processed by the template by including the appropriate number of non-breaking spaces.