I've been having a few issues with Titanium, initially it wouldn't created 1.3 projects but would happily make and build projects for 1.2.
I updated my SDK to 4.0 and Titanium to 1.4 and now it won't build or create projects. I've tried deleting and reinstalling without any luck.
It might also be worth noting that for some ready it states I have the Android SDK when I don't. My colleague isn't showing as having Android and his is create projects no problem at all.