Micromat's Syphone has been reported as 'broken' since the introduction of iTunes 7.6.1 and Leopard.
Here's a quick fix.
The simplest and fastest cure is to purge the preferences file but the caveat is that this has to be done every time that you launch Syphone.
In Finder, locate the Syphone preferences file in your [Home folder]/Library/Preferences/com.micromat.Syphone.plist. Locate the preference file.
Delete it.
Restart Syphone and you're back in business.