I live in Michigan and I have a 7 year old daughter who I have visitation with every other weekend. What I need to know is if she has to have her own room at my house or if her own space is sufficient?

Yeah right! My fiance's son comes every other weekend, I would not designate an entire room from someone who spends 4 days a month with us! Of course that's only if my fiancé is lucky, his son doesn't like coming over because his mother has not instilled responsibilities in him. So he thinks its boring with us because we don't let him sit there and play video games. He complains because we occasionally make him do work, like helping in the garden. I mean if you can afford a place with an extra bedroom just for the child, by all means, but if you are on a tight budget like most are these days, I wouldn't worry about it.

Do you want your child to feel like they are at home or a visitor?

There is no legal reason, in fact if they lived there full time, often because of low income a family with one child lives in a one bedroom where there is a pull out couch.

So no there is no "requirement"
Now I do, my son is over one night a week, and I have his own room, so the door shuts and all of his "stuff" is stored till the next week, and it gives him a feeling that it is his home also.

Do they have to, no, if you can afford it, they should.

I also have my kids during the summer and every other weekend during the school year. Here's what we do. My daughter (10) has her own room that is hers and has her things in it. I someday hope she is with me full time. For my son (14) he has a space in our den with a futon and dresser. However, he usually likes sleeping in our trailer for his privacy because he likes to sleep in late on the weekends. I asked both kids if they wanted to share a room (since they're not here full time) and my son said he did not want to share a room with his sister. Then, we talked about the den and he was fine with that. If I could afford a five bedroom house, I would do that, but we only have a three bedroom and den, so he gets the den.
The other other issue I ran into was trying to rent a place... Most places would not rent a two bedroom apartment to me because I had a son and a daughter. I explained that my daughter and I would share a room, but they said they wouldn't do it.
Personally, I think that so long as you talk about it beforehand and make the child feel like they have their own space, it should be fine. Not too many people change afford to have empty rooms for most of the month.