Compiling the entire checked out code from Trunk folder generates following errors:

1) target specifies product type 'com.apple.product-type.tool', but there's no such product type for the 'iphonesimulator' platform

2) Internal error occurred while creating dependency graph: ASSERTION FAILURE in /SourceCache/DevToolsBase/DevToolsBase-1691/pbxcore/Target.subproj/PBXTargetBuildContext.m:2061 Details: Assertion failed: [filePath isAbsolutePath] Object: <PBXTargetBuildContext:0x20092fb40> Method: -setHeadermapToolInvocation:forFilePath: Thread: <NSThread: 0x200f43200>{name = (null), num = 8}

I am using XCode 3.2.3 and Simulator 4.0

Could you kindly help what I am missing?

I personally just gave up on using Xcode4 in general. BTstack uses the "./bootstrap.sh && ./configure --target=iphone && make" as explained on GettingStarted. You may compile iPhone apps with Xcode if you can handle it. I suggest to use "theos" for app -> http://nix.howett.net/ipf.html