After pushing many buttons I found a solution. The problem was the order in which I performed the installation of this package.
From the IS documentation:
“On the subscribing server, the user installing the package must have List access to see it
from the Install Inbound Releases screen. This means that the ACL must exist on the
subscribing server and the installing user must be a member of that ACL.”
What I had done was installed the package but not activate it, as an administrator. Then created the required user, group and associated them to an ACL for the package. After creating the ACL I then attempted to activate the package (with the above error).
I installed the inbound release again, after having the ACL and permissions all set up and the package activated no problem.
Thanks, hopefully someone will benefit from my soliloquy.