I am trying to create an add hoc version over the desktop app of Test FLight but it fails to find the sdk?
I suspect there are some issues with the TestFlight client since the 1.1 SDK update, which add support for ARMv7s (iPhone 5). I had exactly the same issue.
You can still upload your builds using the web-interface. Everything works there, so better to wait for a client app update.
To upload a build, from xCode, go to the Organizer (cmd-shift-2), and select "Archives".
Select the archive you need to upload, and click "Distribute".
Select "Save for Enterprise or Ad-Hoc deployment", and select your signing identity.
You'll then be able to save the ipa file, that you can upload using the TestFlight web interface.