The solution is to move the dylib somewhere else.

(from a Chilkat customer) “I created chilkat-9.2.1-macosx-10.5/lib/dylib and moved the dylibs into it.  Since my library search path in the project settings is not recursive, Xcode can’t find the dylib and links to the static lib.  It’s quirky and slightly hackish but you might want to consider structuring your download the same way to prevent other Xcode users from running into the problem.”

Note: The next version of the Chilkat Objective-C libs will be structured such that the dylibs and static libs are in separate directories.  Hopefully this will prevent this pitfall (where a user *thinks* the static lib is being linked, but in fact XCode is linking against the dylib).