Noticed the problem, I had same issue on new files i made. Tabs vs. spaces, the game uses tabs for indentation and the mod code all expects tabs. You need to convert all those spaces to tabs, then it should work.
Edit: It's more than that, testing out more. The mod code expects all following lines to begin with a tab too, so the "Race One" and "Race two" need to be indented. However, even with that, using a regex tester it doesn't match the regex the game is using for variables.
Edit2: The game's regex for variables does not support this far as I can tell,
(var.*=)\s([{]([^\{\}]*[\r\n]*)*[}])?([^\{\}\s]*)
That won't match anything with nested {}'s which are required for adding a race. You could work around this by defining your own races, and then appending them to the official ones during startup of the game? Otherwise, we'll need a new version that supports this. Basically that chunk of code needs to be amended to also accept a form where it's "var blah = {" followed by a series of lines starting with tab, and then ending with a }, similar to what it does for functions.
To work around this, instead of modifying races.gd, add your own file that defines those 2 races, then do something like this for scripts/globals.gd