I'm using Moodle, but in English, so I haven't had much of a challenge with Language Packs. However, I have been able to modify language strings in the existing installation.
I just tried it and got that error, but it gives you instructions on how to get around the restriction:
Because Moodle can not connect to download.moodle.org, we are unable to do language pack installation automatically. Please download the appropriate zip file(s) from the list below, copy them to your /home/MYUSER/MYDOMAIN.COM/uploaddata/lang/ directory and unzip them manually.
Language packs are available at:
That page mentions that you should be doing it automatically, but the table of language packs listed are for 1.6 manual installation.
If you're new to the shell and have trouble unzipping, post back.