TeXShop 1.35 comes with a new Find panel, which requires system 1.3 or later. Other users will still see the old panel. It is possible to revert to the old panel using TeXShop preferences, but most users will find that the new panel is more powerful; it supports regular expressions. At first this panel may not behave as you expect, but the panel remembers the various choices it presents, and you should be able to configure it to behave as you expect.

The remaining comments are for users with versions before 1.33, who may not have made these changes earlier. In the TeXShop preference panel with the Engine tab, the following changes should be made:

1. The pdftex preference should be
     pdftex --shell-escape
2. The pdflatex preference should be
     pdflatex --shell-escape
3. The altpdftex preference should be
     altpdftex --maxpfb
4. The altpdflatex preference should be
     altpdflatex --maxpfb

Japanese users of TeXShop 1.26 or earlier should replace the file ~/Library/TeXShop/LatexPanel/completion.plist with the English version, because a modification for Japanese(ShiftJIS ¥) is no longer necessary. To make this happen, remove the completion.plist file from the folder; a new file will be created the next time TeXShop starts.

How do I configure TeXShop?
Default Preference Items