This doesn't sound like a provisioning issue. I don't think the app will deploy at all if the provisioning is wrong.
If you Google on your final error e.g.
/Developer/Platforms/iPhoneOS.platform/Developer/usr/bin/libtool failed with exit code 1
There are a number if things that can cause this, which are usually related to the project setup.
I suspect the issue is that the issue is related to the project file that comes with the Sparrow AppScaffold and Demo.
i.e there is a setting in the project that is incompatible with your hardware.
What version of OS are you running on the 4S, are you running a Beta or the stock OS that its shipped with.
The AppScaffold worked fine on my iPhone 4, running OS 5.0.1 and also on an iPad2 (on OS 5.something)
I'm also using Xcode 4.2.1 and it works OK.
BTW. Did XCode ask you to update the project settings. This sometimes happens, but it doesn't seem to affect anything I've worked on, so far 😉
It seems a bit radical, but if you start a new project from scratch, and it works on your hardware, you could follow the instructions on the Wiki of how to make a new Sparrow project from scratch and see if that fixes it.