Always use italics to write E. coli. Always use a single space after the dot (i.e. before "coli") in E.

Should names of bacteria be italicized?

All bacterial and many viral genes are italicized. Serovars of Salmonella enterica are not italicized. For organisms other than bacteria, fungi, and viruses, scientific names of taxa above the genus level (families, orders, etc.) ... Use italics for genus and species in virus names.

Do you italicize Bacillus?

The term "Bacillus" (capitalized and italicized) is also the name of a genus (Bacillus anthracis) that, among many other genera, falls within the class Bacilli.