One potential reason for receiving this error message is if the file name specified is not correct.
For example:
switch#install all kickstart bootflash:n7000-sl-kickstart.5.1.1a.bin system bootflash:n7000-sl-dk9.5.1.1a.bin
In this example, the file name contains “sl” (lowercase letter l) instead of “s1” (number 1).