Are you on a Mac ? If you run TextWrangler from the command line (Terminal.app) does TextWrangler open?
My guess is that git is expecting you to pass it the name of an executable that is in your PATH ... I would also guess that TextWrangler is not (this is just a guess, no experience with it).
Try changing core.editor to vim and see if you still get the error.
Also - check out this thread (it may help).
