I don't know if anyone is still looking for the answer, but here it is:
Sign in to the account you're trying to add to the Xbox Live Family, and go to their Account Settings. You should see an option "Promote Account." Select that, and you'll be able to add that account.
The problem is that you're trying to add someone else's child to your family. You need to "promote" that child back to an adult before adding him/her to your own family.
Put differently: that account was previously a member of a different Xbox Live Family. "Promoting" that account removes it from that Xbox Live Family completely (not just Gold status), allowing you to add it to a new one.