The problem is that the $(...) sub-shell in your command is evaluated at the time you run the command, and not evaluated by xargs for each file.
You could use find's -exec instead to evaluate commands for each file in a sh, and also replace the quoting appropriately:
find . -name "*[a-z][A-Z]*" -type f -exec sh -c 'echo mv -v "{}" "$(echo "{}" | sed -E "s/([a-z])([A-Z])/\1 \2/g")"' \;
If the output of this looks good, drop the echo in echo mv.
Note that due to echo | sed, this won't work with filenames with embedded \n. (But that was an already existing limitation in your own attempt, so I hope that's acceptable.)
