Well by looking at the message:

It states that the editor.detectIndentation setting is that is capable of overriding the editor.insertSpaces setting.

So open the command pallate with the CTRL+SHIFT+p keyboard shortcut and type settings.json :

Click on "Preferences: Open User Settings(JSON)"

then add the following to the top of the User Settings JSON:

{
    "[makefile]": {
        "editor.insertSpaces": false,

        // Stops the insertSpaces setting from being overriden.
        "editor.detectIndentation": false

    }, // <--- if you don't have more settings delete this comma

    // {
    //     <more settings down here>
    // }, ...
}