Since I could not find a solution or explanation for this error in the the great JAMF Nation / Google / Internet troubleshooting database, I would like to share one possible cause for
Installation failed. The installer reported: installer: Cannot install on volume / because it is disabled.
Background: Attempting to distribute package via policy in JSS. Received the error in policy log. The package is a .MPKG and being pushed through SMB.
Solution: Turned out the software had a software requirement (could only run on Mac OS X 10.6 or later) and was failing on Mac OS X 10.5.x assets. I am also speculating that this error may occur if there is a hardware requirement issue as well.