With thanks to Esther Lee and John Heffernan, here are a couple of solutions if the LEGO^® WeDo themed activities do not appear (yellow LEGO face is greyed out) while operating LEGO WeDo software (v1.2) on Mac OS 10.7 (Lion). Note: The first solution worked for me, and I was able to later go in and lock the file mentioned below.

Solution 1

1. Reinstall your LEGO WeDo v1.2 software (you may first need to relocate and download “WeDo: Mac OS 10.7 (Lion) Installer Fix” from www.education.lego.com, as there is an additional issue installing LEGO WeDo v1.2 with the Lion operating system;
2. Find the file called “wedo.ini” using Finder. No need to open the file, just right click on it and "Get Info”;
3. Find the box that allows you to check “Lock”. If the box is un-highlighted and you can’t check it, scroll down to “Sharing and Permissions”. Click on “Read only” for all the options.

Solution 2

1. After locating the “wedo.ini” file, open using Text Edit.
2. Copy and paste the following line exactly as you see it into the last entry: Head="Library:Application Support:WeDo:Activities:index.html".
3. Exit Text Edit and attempt to go back into the wedo.ini file and check “lock”.

The reason for this error occurring is the wedo.ini file is deleting a line that refers to the videos in the LEGO WeDo software. Hopefully later patches will eliminate this problem for new users.