To produce a source jar so you can step through android library code do the following:

* git clone git://git.source.android.com/platform/frameworks/base android-api
* git checkout android-1.0

* jar cvf ../android-src.jar -C core/java .
* jar uvf ../android-src.jar -C graphics/java .
* jar uvf ../android-src.jar -C location/java .
* jar uvf ../android-src.jar -C media/java .
* jar uvf ../android-src.jar -C opengl/java .
* jar uvf ../android-src.jar -C sax/java .
* jar uvf ../android-src.jar -C services/java .
* jar uvf ../android-src.jar -C telephony/java .
* jar uvf ../android-src.jar -C wifi/java .

If you don't have git for osx get it here:

code.google.com/p/git-osx-installer/

A simpler approach is to copy the sources to the default source location, this is <android-sdk>/platforms/android-x.x/sources.

The sources directory should be in the same directory as "android.jar"