Fix normalize_paths to allow whitespace

This fixes normalize_paths so that it strips whitespace before and after
paths before working on them. This allows you to do specify excludes
with multiple lines in the config file.

This also tweaks normalize_paths so that the behavior matches the
docstring.

This also adds tests.

Fixes #339
I don't have a preference one way or the other. I changed this code because the docstring says it returns a list, but the code was just returning falsey values. I don't have a preference for my version or your version or even changing it to raise a ValueError.