You're right but this way it looks way more complicated ;)

I expected an empty first word to be invalid input.

both -Foo-bar and -foo-bar are apparently supposed to be FooBar

Nevermind I think you're right :) I hadn't noticed that row was shared down the board.

I can only see O(n^2). Still was a quick and dirty solution, I don't care enough for the 1 point I get from 6 kyu Katas. ;)

Agreed. This is not only poorly worded, but breaks with intuition. For most applications, whitespace is whitespace. If you want to differentiate between ' ' and '\n' you should do so explicitly.

This is O(n^3) in the size of the board :(

Your scan is just (+)