The reason you get this message is because WordPress cannot currently write to disk. For more information on this problem, please read our blog entry here.
We've provided a method of passing your FTP details directly to WordPress when you perform your updates.
The screenshot below is the environment summary tab for a site that doesn't support WordPress disk writing. We have highlighted for each site various permissions, one of which is whether it can write to disk. When you fill in the FTP details for that site, the system will update the capability (assuming your FTP details are correct).
Then, when you perform updates within iControlWP, we will automatically pass through your FTP details and the updates will happen automatically for you.