If you get the message:

"/usr/texbin/altpdflatex does not exist"

when running TeXShop for the first time 
 you probably are running an older version of TeXShop..

altpdftex is the old name for simpdftex; this was changed in early 2006.
What happens sometimes is that TeXShop picks up old preferences.

So I recommend that you
        a) Download TeXShop from my site,                                                                                                                                  
             http://pages.uoregon.edu/koch/texshop/texshop.html 

        b) Remove ~/Library/Preferences/TeXShop.plist
           so you will start with brand new default preferences.

Dick Koch                                                                              
koch (AT) math.uoregon.edu                                                             
August 11, 2007