Is there any write protection on the file?
nope, its packages, creates a folder but inside that folder, you only have the font and links folder...no indesign file.
Is the file on a server or other location than on your physical hard drive?
On a server
What happens if you work locally, does it work then?
Save the indd file to your desktop and try package...
Is the server Mac or Windows?
It works on the desktop, but not sure its this is the good part of it being tempermetnal.