The short answer is: you are seeing the ”Base SDK Missing” message because the sdk your project is targetting is gone. Xcode 3.2.* ships with 3.2 and 4.* only.

To fix it, you need to go to Project Settings (ctrl+click -> Get Info), then set the Architecture/Base SDK to 4.0. This is what you will be compiling against.

Optionally, if you want to support pre-4.0 devices, also set Deployment/iOS Deployment Target to whatever your minimum supported OS is. (Make sure you are not using features that are not available in this SDK, or check for them before you use them, because otherwise your users will get runtime errors.)

For more info, this Stack Overflow post is a great starting point to making sense of why this is happening and what you can do about it: http://stackoverflow.com/questions/3161385/install-xcode-3-2-3-w-iphone-sdk-4-get-base-sdk-missing-cant-see-other-sdks

It also links to some great resources on your options for supporting multiple iOS versions.