Currently tab size in my desktop notes widget equals illogically huge 26 spaces!

Is there a way to change that?

This would appear to be due to a default in QTextEdit, which is the underlying system being used in the Notes applet.
See http://doc.qt.digia.com/qt/qtextedit.ht ... Width-prop (the "26 spaces" is 80 pixels by all accounts).

Getting this changed will require code changes - please file a feature request report at bugs.kde.org.