Building an iPhone project results in:
Failed to launch simulated application: SpringBoard failed to launch application with error: 7
I had same problem, the Simulator would just hang. This is on a fresh install of XC 3.2.5 GM and using Simulator with 4.2 SDK. Apps would run fine on a real device but the simulator would just hang.
I ended up changing the iPhone App Support directory and all sub dirs to 777 access permissions. Not a great idea to 777 -R, but I was desperate and it worked.
$sudo chmod -R 777 ~/Library/Application Support/iPhone Simulator/