That's not a very helpful error message that the API returns (we are working on building in more helpful error codes into the next version of our API).
Behind the scenes, what's happening is that it has found that the user whose email address you are trying to change is an SSO User and our system does not let you change the email adress of SSO Users by default (since that is often only done via the SSO token).
If you would like to be able to change an SSO user's email address via the API, you should be able to open a ticket with support and request that the configuration that lets you do this be turned on.
-Doug