I understand that to Nominalize a verb we can use the particle の or the term こと.
However the -masu stem of a verb on its own also changes the verb into a noun phrase e.g 読み.

What is the difference between the two? When do we use the latter?

Sorry, can you give an example where 読み would be used as a noun?

You can say
読むのが好きです
読むことが好きです

Which I assume is what you mean, but you can't say 読みが好きです, if that's what you meant?

There are some verbs who can be turned into nouns like that but it does not seem to work in any case.

e.g. 隔て

I just answered this same question somewhere -- was it in Word/Phrase? I don't remember.