Error: "The list cannot be displayed in Datasheet view for one or more of the following reasons:..."

1. Download and install the 2007 Office System Driver for Data Connectivity Components.

or

2. Install the 2007 SharePoint Services Support, which is available on the Microsoft Office 2007 installation media.

Reference:
http://njbblog.blogspot.com/2010/06/sharepoint-datasheet-view-office-2010.html