I’m writing this in case anyone else is looking for an answer to this question.
For a long time, at certain times, whenever I tried to install an app on my HTC Desire S, the ‘Install’ button would be greyed out and refuse to work.
I spent ages looking for the answer, typing the question in countless variations into Google when I came across the answer in a forum.
If you have downloaded ‘Screen Filter’, an app which darkens your screen to save the battery and reduce glare in darkened rooms, when activated, somehow the app causes the install button to malfunction.
The fix is simple, just switch off the filter and the install works fine. Screen Filter is a brilliant app so I won’t suggest you uninstall it. Just a simple workaround until the developer fixes it.