I dont know either what it is. But i know it has something to do with file permissions. The script is unable to create files or a directory somewhere.
Check if you have the FTP layer on! This might help
Try installing the component from a directory on the server
Read the text i found on:
http://help.joomla.org/content/view/1685/153/
To Install a New Component From a Directory:
If the host web server does not have GZIP support enabled with PHP it will be necessary to transfer the Component file to the web server using FTP (File Transfer Protocol) or possibly a web host provided control panel, bit these are varied and outside the scope of this Help Screen.
Unpack the compressed .zip file onto the local hard drive before uploading it via FTP. Ideally the file should be transferred to the joomla_root/administrator/components/com_installer/component/yourcomponentname directory of Joomla!.
Once the files are uploaded enter the exact location of this file (it must be the absolute location) in this example: joomla_root/administrator/components/com_installer/component/yourcomponentnamethen click the Install button.
The new Component will be installed by Joomla! in the joomla_root/components/yourcomponentname directory of the web site.