it might be that you are trying to install kloxo on 64bits system.
Do a uname -m to see if its x86_64 (if yes, then its 64bits).
If its a i686, its not.
If you encounter that error, its likely that your /etc/php.ini is configured to disallow function "system".
Edit the php.ini and find for all line with:
Try to find for more of these line. Sometimes its been set more than once.
Updated: 24 Sept 2012:
Okay, normally this error comes out when an installation is incomplete along the process.
So the system have been configured to reject system call, therefore reinstalling it is not possible.
Best way is to reformat your server and install from fresh again.
Normally happen to 64 bits os, best to fall back to 32bits.