So far, I've not had any success getting Xcode 3 to work with existing sandboxes created with the command line svn. Fresh checkouts from Xcode seem to work, though I have not tested this exhaustively).
For example, I've configured a repository in Xcode as svn+ssh://domain.com/svn/foo. The prefs window shows that it authenticates correctly and I can browse the repository successfully.
The existing sandbox folder layout looks like:
foo
trunk
proj1
proj1.xcodeproj
proj2
proj2.xcodeproj
I've opened proj1 and set the Root to <project file directory>/../.., which I think is correct (it's the foo directory).
The problem is that the SCM Repository menu shows the repository I've defined as grayed out and I cannot select it. I can't seem to associate the sandbox with the repository.
Should this work? I've tried changing the root path to every level I can think of and it doesn't seem to like any of them.