If you have created your project and would like to add subversion control to it afterwards, use the following steps to resolve this error:

1) Setup subversion in XCODE and select the subversion repository for this project.

3) Click SCM -> Repository and then the IMPORT icon. This will move the local copy to the subversion repository.

5) Delete your local copy

6) Finally CHECKOUT the project from subversion (this will create the subversion .svn folders)