Reference: http://stackoverflow.com/questions/3677487/install-xcode-3-2-4-get-base-sdk-missing

Edit Project Settings

Load your projectFrom the menu, select Project > Edit Project Settings...Click the "Build" tab.Under "Configurations" select "All Configurations".Go to the Change Base SDK section below.

Edit Specific Target/Configuration Settings

Load your projectFrom the menu, select Project > Active Target > "YourTarget"From the menu, select Project > Edit Active Target "YourTarget"Click the "Build" tab.Under "Configurations" select "All Configurations", or the Configuration you want.Go to the Change Base SDK section below.

Change Base SDK

Under Architecture > Base SDK, choose one of the available device options: iOS Device 3.2 or iOS Device 4.1. If you are iPhone-only, 4.1 is the way to go.If you want to target previous iOS versions, then in that same window, under Deployment > iPhone OS Deployment Target, select the lowest version you want to support. Note that support for 2.x versions through the app store is deprecated.

The Explanation

iOS SDK 4.0 is gone in this release, replaced by iOS SDK 4.1. This is very similar with what happened with the 3.2.3 upgrade, which I covered in detail here . You can still use 3.2.4 to target iOS versions down to 3.0, but AFAIK, you must compile against the 4.1 SDK with Xcode 3.2.4. If this statement confuses you, study the following sentence closely:

The iOS SDK you compile against -- the "Base SDK" -- does not downward limit what iOS versions you can support.

In fact, there are two different settings, cf. Change Base SDK above. If you remain confused, take heart, and read my detailed post on the previous switchover, which is itself chockablock with links to good stuff.