Then you are out of luck it seems. Can't install pywallet and bitcoin-qt doesn't work with a config file...
Is the config file text encoding UTF-8? I know for a fact Mac's like to fuck up text files with odd encodings. lol
I converted it to plain text, then changed the extension to .conf and the command went though perfectly.
Glad to hear it. If I'm understanding correctly, bitcoin-qt will run properly with a .conf file in Mountain Lion? So it is safe for me to upgrade (at least regarding this particular issue).