Im getting this same message too.
We're running an older version (2.3.2) of WordPress on our webservers here at work. My group doesnt know a whole lot about WordPress yet, so since I knew the most, the administration of it defaulted to me. Yay.
The portal site is hosted internally to the company. Im already added as an admin. (The person who added me is no longer a part of the team) So Im trying to figure out how to add more admins. We'd like them to have their own usernames, so we're not all logging in with the same account. Their email addresses are valid, but its giving me that message. We're not trying to have them post on the wordpress.org forums, just access our internal blogs.
There doesnt seem to be any place where the user can "register" on the blog. Just a login/logout link. I was thinking that maybe they needed to have a wordpress.com account in order to be added as a user? But this doesnt seem to be the case either. I tried using a username I do have already signed up with wordpress.com and that didnt work.
Ive done searchs on the forum, for this, but Im coming up empty. Anyone have any ideas?