Well having the two operate together leaves to some strange conflicts as you might expect. Also I got this strange message having to do with an Icon file which has a carriage return in it. That is a Ctrl-M that really confused Git. But http://stackoverflow.com/questions/24186256/atal-reference-has-invalid-format-refs-icon explains that Apple or Dropbox throws an icon file in which git can't read with a illegal character for it in the file name.
The solution is to delete all these icon files with the magic
find . -name "Icon*" -delete