Xcode does not yet support SVN 1.7. Only 1.6 is supported. To fix your problem, you need to switch to a working copy compatible with SVN 1.6.
Since the client of SVN 1.7 cannot work with 1.6 working copies at all, you need to remove SVN 1.7.x from your client and return to 1.6. (Or maybe just adjust your PATH so that the SVN 1.6 tools are first.) As soon as 1.6 returns, delete or move aside the existing working copy and check the new copy with SVN 1.6. Xcode should now work with your working copy.
Please note that you can freely use the SVN 1.6 client with the SVN 1.7 server. Some of the new features will not be available, but they will work. There is no need to downgrade the server or server repositories.
Stay tuned for updates to Xcode releases as updates as I'm sure Apple will notice when Xcode is able to use SVN 1.7. When the 1.7-compatible release of Xcode becomes available, then you should be safe to upgrade the client to version 1.7 and transfer the working copy again.
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