Often in set ups that use version control the project.pbxproj can be merged in such a way that two CODE_SIGN_IDENTITY lines can be inserted. This seems to cause Xcode problems under certain situations (like command-line builds or archiving).
A tell-tail sign is lines similar to this in the project.pbxproj file (right-click on the project and select "Show Package Contents…")
"CODE_SIGN_IDENTITY[sdk=iphoneos*]" = "iPhone Developer"; CODE_SIGN_IDENTITY = "iPhone Distribution"; Deleting one of these lines will let you select the correct value in Build Settings and the project should once again build correctly.
I have created simple script to help diagnose this issue it can be found here: https://gist.github.com/4339226
Link on stackoverflow: http://stackoverflow.com/questions/13962341/xcode-fails-with-code-signing-error