I am using Xcode 4.2.1 and I have this problem running an existing application on the iOS simulator:
svn: The path \'.\' appears to be part of a Subversion 1.7 or
There is a post that appears to imply that you can fool XCode into using svn 1.7 client by changing your PATH and setting up a couple of soft links in strategic places. Unfortunately, the post is in Chinese. Fortunately, Google translate and the presence of UNIX commands make it possible to decrypt what the post is saying. I will try it in the next few days, and update the answer if anything useful comes out of this exercise.
EDIT: I tried the steps from the post, and it worked. Here is what I did:
/opt/subversion
PATH
in .bash_profile
/Developer/usr/bin/orig.svn
/Developer/usr/bin/svn*
to /Developer/usr/bin/orig.svn
ln -s /opt/subversion/bin/svn* /Developer/usr/bin/
After that I re-started XCode, went to Organizer, and was able to attach a working copy of a checkout created with svn 1.7.2 client. Organizer showed a green dot next to the repository, displayed a list of revisions, etc., so at this point I believe that the trick has worked.