Proof.
For any morphism V \to Y the complex K_ V is pseudo-coherent (Cohomology on Sites, Lemma 21.45.3) and E_ V is V-perfect (More on Morphisms of Spaces, Lemma 76.52.6). Another observation is that given y : \mathop{\mathrm{Spec}}(k) \to Y and a field extension k'/k with y' : \mathop{\mathrm{Spec}}(k') \to Y the induced morphism, we have
\mathop{\mathrm{Ext}}\nolimits ^ i_{\mathcal{O}_{X_{y'}}}(K_{y'}, E_{y'}) = \mathop{\mathrm{Ext}}\nolimits ^ i_{\mathcal{O}_{X_ y}}(K_ y, E_ y) \otimes _ k k'
by Derived Categories of Schemes, Lemma 36.22.6. Thus the vanishing in (1) is really a property of the induced point y \in |Y|. We will use these two observations without further mention in the proof.
Assume first Y is an affine scheme. Then we may apply More on Morphisms of Spaces, Lemma 76.52.11 and find a pseudo-coherent L \in D(\mathcal{O}_ Y) which “universally computes” Rf_*R\mathop{\mathcal{H}\! \mathit{om}}\nolimits (K, E) in the sense described in that lemma. Unwinding the definitions, we obtain for a point y \in Y the equality
\mathop{\mathrm{Ext}}\nolimits ^ i_{\kappa (y)}(L \otimes _{\mathcal{O}_ Y}^\mathbf {L} \kappa (y), \kappa (y)) = \mathop{\mathrm{Ext}}\nolimits ^ i_{\mathcal{O}_{X_ y}}(K_ y, E_ y)
We conclude that
H^ i(L \otimes _{\mathcal{O}_ Y}^\mathbf {L} \kappa (y)) = 0 \text{ for } i > 0 \Leftrightarrow \mathop{\mathrm{Ext}}\nolimits ^ i_{\mathcal{O}_{X_ y}}(K_ y, E_ y) = 0 \text{ for }i < 0.
By Derived Categories of Schemes, Lemma 36.31.1 the set W of y \in Y where this happens defines an open of Y. This open W then satisfies the requirement in (1) for all morphisms from spectra of fields, by the “universality” of L.
Let's go back to Y a general algebraic space. Choose an étale covering \{ V_ i \to Y\} by affine schemes V_ i. Then we see that the subset W \subset |Y| pulls back to the corresponding subset W_ i \subset |V_ i| for X_{V_ i}, K_{V_ i}, E_{V_ i}. By the previous paragraph we find that W_ i is open, hence W is open. This proves (1) in general. Moreover, parts (2) and (3) are entirely formulated in terms of the category \textit{Spaces}/W and the restrictions X_ W, K_ W, E_ W. This reduces us to the case W = Y.
Assume W = Y. We claim that for any algebraic space V over Y we have Rf_{V, *}R\mathop{\mathcal{H}\! \mathit{om}}\nolimits (K_ V, E_ V) has vanishing cohomology sheaves in degrees < 0. This will prove (2) because
\mathop{\mathrm{Ext}}\nolimits ^ i_{\mathcal{O}_{X_ V}}(K_ V, E_ V) = H^ i(X_ V, R\mathop{\mathcal{H}\! \mathit{om}}\nolimits (K_ V, E_ V)) = H^ i(V, Rf_{V, *}R\mathop{\mathcal{H}\! \mathit{om}}\nolimits (K_ V, E_ V))
by Cohomology on Sites, Lemmas 21.35.1 and 21.20.5 and the vanishing of the cohomology sheaves implies the cohomology group H^ i is zero for i < 0 by Derived Categories, Lemma 13.16.1.
To prove the claim, we may work étale locally on V. In particular, we may assume Y is affine and W = Y. Let L \in D(\mathcal{O}_ Y) be as in the second paragraph of the proof. For an algebraic space V over Y denote L_ V the derived pullback of L to V. (An important feature we will use is that L “works” for all algebraic spaces V over Y and not just affine V.) As W = Y we have H^ i(L) = 0 for i > 0 (use More on Algebra, Lemma 15.75.6 to go from fibres to stalks). Hence H^ i(L_ V) = 0 for i > 0. The property defining L is that
Rf_{V, *}R\mathop{\mathcal{H}\! \mathit{om}}\nolimits (K_ V, E_ V) = R\mathop{\mathcal{H}\! \mathit{om}}\nolimits (L_ V, \mathcal{O}_ V)
Since L_ V sits in degrees \leq 0, we conclude that R\mathop{\mathcal{H}\! \mathit{om}}\nolimits (L_ V, \mathcal{O}_ V) sits in degrees \geq 0 thereby proving the claim. This finishes the proof of (2).
Assume W = Y but make no assumptions on the algebraic space Y. Since we have (2), we see from Simplicial Spaces, Lemma 85.35.1 that the functor F given by F(V) = \mathop{\mathrm{Hom}}\nolimits _{\mathcal{O}_{X_ V}}(K_ V, E_ V) is a sheaf1 on (\textit{Spaces}/Y)_{fppf}. Thus to prove that F is an algebraic space and that F \to Y is affine and of finite presentation, we may work étale locally on Y; see Bootstrap, Lemma 80.11.2 and Morphisms of Spaces, Lemmas 67.20.3 and 67.28.4. We conclude that it suffices to prove F is an affine algebraic space of finite presentation over Y when Y is an affine scheme. In this case we go back to our pseudo-coherent complex L \in D(\mathcal{O}_ Y). Since H^ i(L) = 0 for i > 0, we can represent L by a complex of the form
\ldots \to \mathcal{O}_ Y^{\oplus m_1} \to \mathcal{O}_ Y^{\oplus m_0} \to 0 \to \ldots
with the last term in degree 0, see More on Algebra, Lemma 15.64.5. Combining the two displayed formulas earlier in the proof we find that
F(V) = \mathop{\mathrm{Ker}}( \mathop{\mathrm{Hom}}\nolimits _ V(\mathcal{O}_ V^{\oplus m_0}, \mathcal{O}_ V) \to \mathop{\mathrm{Hom}}\nolimits _ V(\mathcal{O}_ V^{\oplus m_1}, \mathcal{O}_ V) )
In other words, there is a fibre product diagram
\xymatrix{ F \ar[d] \ar[r] & Y \ar[d]^0 \\ \mathbf{A}_ Y^{m_0} \ar[r] & \mathbf{A}_ Y^{m_1} }
which proves what we want.
\square
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