I was following the instructions from this MSDN article.
All posts I read were saying that my schema.xml file should refer to internal names. But I copied \FEATURES\DiscussionsList\Discuss\schema.xml , so if there were bad internal names it was SharePoint's fault, so I thought. It so happens that the problem was not related to internal names or escaping of space characters in internal names. It happened because I wasn't referring to the name of my custom list. (and I'm using a different BaseType)
The error message didn't help me much either...