Hi
I think there is a little bit of confusion with terminology here.
First let me apologise about the 0.577 figure: I wasn't trying to be misleading. What I was trying to suggest was that, given a fatigue STRENGTH in bending, von Mises theory allows a good estimate for fatigue STRENGTH in torsion. If you have fatigue data for your particular material in torsion, then this should be used instead. The von Mises theory correlation is very near though.
Like feajob and yugbalan have already stated, it is principal stresses that should be used for the calculation as, like you yourself have stated, Tau(1)=Sigma(1).
I think the terminology is getting confused between stress range and stress amplitude. yugbalan is talking about stress range, which does equal 2 x Sigma(1). Your stress amplitude, however, is simply Sigma(1) {or [[Sigma(1)--Sigma(3)]/2]. This is all tied up with whatever fatigue stress life assessment method you are to use but, as I mentioned earlier, for pure torsion with no mean stress, you should expect a fatigue failure once Tau(1) {or Sigma(1), or Sigma(Amplitude)} exceeds your fatigue STRENGTH in torsion.
Indeed, for steels at least, upto some limit on mean stress (which I assume to be material dependent), the mean stress itself has no effect on fatigue, for pure torsion only.