I first came across this error when trying to install the Read It Later extension, then saw it again when attempting to install Live Writerfox, and discovered that it wasn’t a problem with either extension, but a problem with corrupt extension files (or potentially a corrupt profile).
From Mozillazine.org:
Installing themes or extensions may fail with the message, Unexpected installation error -203. (If this occurs after a Software Update you may find that add-ons that were previously installed also do not work.) Follow the above directions to remove corrupt extension files. [14] If the problem is not resolved and you use ZoneAlarm or CA Firewall, disable it temporarily (enable Windows Firewall in the interim) to allow the installation. [15] If the problem persists, your profile may be corrupt (bug 361358). Use the Profile Manager to create a new profile [16] or create a new default profile [17] and then transfer your data to the newly-created profile.
And here’s the fix:
Files that store information about the extensions you have installed can sometimes be corrupted. Deleting them can fix a number of extension issues; they will be regenerated the next time you start Firefox. [12][13]. Exit Firefox completely, then open your Firefox profile folder (read the linked article for its location) and delete* these three files:
- extensions.ini
- extensions.cache
- extensions.rdf
- Note : Although unwanted files/folders can be deleted, renaming them is generally considered a safer option. This achieves the same result, but allows the user to retrieve any possibly required information from them later on. In the case above, rename the above 3 files as , ‘extensionsOLD.ini’, ‘extensionsOLD.cache’, ‘extensionsOLD.rdf’
(http://kb.mozillazine.org/Unable_to_install_themes_or_extensions_-_Firefox#Corrupt_extension_files)
If that still doesn’t fix the issue, your profile may be corrupt (as mentioned above), and you’ll find a fix at the link below, which involves recreating your profile from scratch:
Hope this helps you out…it was quite frustrating for me. 
Thanks for the above information. There is another way of solving 203 error which most of the Firefox users get when they try to install extensions on their browser. In the following URL read more on 203 error one can read them.
Thanks.