As suggested in the Android Central forum post follow the workaround to solve the issue,
Settings-> Storage -> Unmount SD Card.
Now install the app from the Playstore.
Settings -> Storage -> Mount SD Card and start using the app.
The above steps solved the issue for many while this is not an actual fix it should solve the problem temporarily for installing an app.
As explained in this blog post the actual problem and has a fix for that,
The problem is caused by a temporary file called
smdl2tmp1.asec that is used during some installations (I think of apps that are movable to SD) but does not get deleted for some reason, most notably when you run out of space. Because of this, the system can't create it and treats it as an error, rather than figuring out that it's stale and simply deleting it.
The solution is go and delete
smdl2tmp1.asec yourself. From what I can tell, it could reside in two locations:
/sdcard/.android_secure - this is an invisible folder on your SD card, which you can access with any file manager, like ASTRO File manager.
/mnt/secure/asec/ - access to this folder requires root and a program like Root Explorer
smdl2tmp1.asec in these folders and delete any ones you see. Since it's just a temporary file deleting it seems to be a safe enough operation. Once you've done that, all the update problems should go away.