Bug explaination

NtCreateFile can create and access directories using names like " ." but CreateFile can't do it. Following the same example, it changes it to " " which is an absolutely different directory.
It is done by KERNELBASE!_imp__RtlDosPathNameToRelativeNtPathName_U_WithStatus which "Remove any trailing spaces or dots for the last path element, assuming that it isn’t a single or double dot name" as explained here: "Types of DOS Path" section of https://googleprojectzero.blogspot.com/2016/02/
See the following screenshot taken when accessing to " ." using explorer.exe.

Implications

1. You can hide malware from antivirus agents which uses CreateFile to access files and directories.
2. You can also hide malware from users who uses programs like explorer.exe and cmd.exe which, finally, relies on CreateFile.

Disclosure

Microsoft will not fix this issue because of the following reason:
"This is a known portion of the file structure and is detailed online. Beyond that, an attacker would already need to have compromised a machine to make use of this".

I decided to publish the code.

UPDATE: I asked to Microsoft for the online documentation and they, kindly, reply to me with this link (https://docs.microsoft.com/en-us/windows/win32/fileio/naming-a-file?redirectedfrom=MSDN) and referring to this phrase: "Do not end a file or directory name with a space or a period. Although the underlying file system may support such names, the Windows shell and user interface does not."

PoC

PoC file
Mini DDK dependency

Note*: If you are testing the PoC and wants to remove the resulting "C:\ ." directory, a simple way to do it is by using the GIT console: https://git-scm.com/download/win

Debugging session

1. Kernel32!CreateFileW calls to KERNELBASE!CreateFileInternal

771de463 8364240c00 and dword ptr [esp+0Ch],0
771de468 8b4514 mov eax,dword ptr [ebp+14h]
771de46b 8b550c mov edx,dword ptr [ebp+0Ch]
771de46e 8b4d08 mov ecx,dword ptr [ebp+8] ; u"C:\ .\my_hidden_malware.exe"
771de471 89442410 mov dword ptr [esp+10h],eax
771de475 8b4520 mov eax,dword ptr [ebp+20h]
771de478 6a00 push 0
771de47a 89442418 mov dword ptr [esp+18h],eax
771de47e 8d442404 lea eax,[esp+4]
771de482 50 push eax
771de483 ff7518 push dword ptr [ebp+18h]
771de486 ff7510 push dword ptr [ebp+10h]
771de489 e812000000 call KERNELBASE!CreateFileInternal (771de4a0)

2. Debugging session in KERNELBASE!CreateFileInternal

KERNELBASE!CreateFileInternal:
771de4a0 8bff mov edi,edi
771de4a2 55 push ebp
771de4a3 8bec mov ebp,esp
771de4a5 83e4f8 and esp,0FFFFFFF8h
771de4a8 81ec84000000 sub esp,84h
771de4ae a1307b2a77 mov eax,dword ptr [KERNELBASE!__security_cookie (772a7b30)]
771de4b3 33c4 xor eax,esp
771de4b5 89842480000000 mov dword ptr [esp+80h],eax
771de4bc 53 push ebx
771de4bd 56 push esi
771de4be 8b7510 mov esi,dword ptr [ebp+10h]
771de4c1 8bd9 mov ebx,ecx ; u"C:\ .\my_hidden_malware.exe"

3. RtlInitUnicodeStringEx works well putting u"C:\ .\my_hidden_malware.exe" into [esp+34]

771de4fe c744241401000000 mov dword ptr [esp+14h],1
771de506 53 push ebx ; Source
771de507 8d442434 lea eax,[esp+34h]
771de50b 50 push eax ; <----- Destination
771de50c ff1570b12a77 call dword ptr [KERNELBASE!_imp__RtlInitUnicodeStringEx

0:000:x86> du poi(esp+34)
0040422c "C:\ .\my_hidden_malware.exe"

4. Then, the string is passed to KERNELBASE!_imp__RtlDosPathNameToRelativeNtPathName_U_WithStatus

771de549 50 push eax
771de54a 6a00 push 0
771de54c 8d442438 lea eax,[esp+38h]
771de550 50 push eax
771de551 53 push ebx ; "C:\ .\my_hidden_malware.exe"
771de552 ff1538b92a77 call dword ptr [KERNELBASE!_imp__RtlDosPathNameToRelativeNtPathName_U_WithStatus (772ab938)] ds:002b:772ab938={ntdll_77d00000!RtlDosPathNameToRelativeNtPathName_U_WithStatus (77d412f0)}

5. And then, the vulnerability happens.

771de552 ff1538b92a77 call dword ptr [KERNELBASE!_imp__RtlDosPathNameToRelativeNtPathName_U_WithStatus (772ab938)]
771de558 85c0 test eax,eax
771de55a 0f88f61e0300 js KERNELBASE!CreateFileInternal+0x31fb6 (77210456)
771de560 8b442434 mov eax,dword ptr [esp+34h] ; "??\C:\ \my_hidden_malware.exe"