Thank you for the information, Annie. We will pass on the information to our main developers with this issue with this particular combination of iMac and system 10.5.8. Since this problem has appeared for a few people, I don't think re-installing will have any bearing on success.
We have done some research and have found out, boiling things down to simple terms, that this first generation of Core 2 Duo processors in the iMacs has problems with 64 bit management. The 64 bit system is turned off by default by Apple, but that doesn't mean that applications cannot access and attempt to run in 64 bit. This may be what is happening as FFMPEG runs 64 bit on Macs that are capable of it (even though the iMac 7,1 has problems with 64 bit).
If you are willing to try a little command line interface interaction with your iMac, this might solve your problem (not for the feint of heart, so if anyone reading this does not feel comfortable doing it, please don't and wait for the next update of the Blender) by removing the 64 bit code from FFMPEG, forcing it to use the 32 bit code. (This will not change anything in your system, and can be un-done by re-installing Workout Blender.)
1) You'll need to first restart your computer.
2) Next, launch the Terminal application (located in the Applications > Utilities folder).
3) You'll need to work from the ">" at the beginning of the line. Your window will probably show something like mine:
Last login: Tue Jan 4 09:18:24 on console
fsh-wks-13:~ cwkapus$
You'll need to type a backslash \ then return to get the ">" prompt:
>
4) Copy from here or type all in one line with no returns until the end of the command, then hit a return: lipo /Applications/Air\ Video\ Server.app/Contents/Resources/ffmpeg -remove x86_64 -output /Applications/Air\ Video\ Server.app/Contents/Resources/ffmpeg
5) Quit out of Terminal, Restart the computer, and then attempt to use Workout Blender and let us know if it fixed the problem.