Comment on How to Update WordPress Themes by SEO Dave.
Sounds like the folders permissions isn’t set to allow WordPress to write to the folder the WordPress theme installer is trying to temporarily move the zip file to so it can extract it. Some hosts/servers are setup to allow write access, some aren’t.
The solutions is to change the permissions of the folder it says you can’t move the zip file to. To make sure it works, temporarily change the permissions to 777, after you’ve installed Stallion change the permissions back to what it was before (leaving at 777 is a security issue).
You can use an FTP program like Filezilla (browse to the folder, right click it and click permissions, note down the numbers so you can change it back and change to 777) or possibly via your Control Panel, each Control Panel is different, so no idea how yours would work. After the themes installed change the permissions back.
Could also be you’ve uploaded a theme to the wrong folder and it’s breaking a theme options page.
If you add a theme folder within another folder:
You’ll get the permissions error because the theme options page code will be looking for the files within the correct folder.