I've got Snow Leopard installed (10.6.4) and using Titanium 1.2.1. Everything was working fine and then I created a new project (no odd characters were used in the creation stage) and now when I try to launch a project in Titanium it fails - the SDK version continually says "loading" (it should say 4.0).
I have uninstalled and reinstalled Xcode and Titanium but the same problem remains.
Interestingly, when I run the iPad app I was working on the emulator just shows the home screen with icons and if I slide to the left I can see the icon for my app, which I can then open and it runs correctly. But if I create a new iPad app nothing happens (the emulator fails to open).
There's a post about this here: (I assume you've recently updated to iTunes 10?)
Or you could fix it by getting the latest build of the Titanium SDK here which has a fix for it built in :