When you try to create an account for a child, it checks to see if there is already an existing account based on the first name, last name, and email or sms you entered. If it finds a match to an existing account (maybe it was created at a youth activity, but never associated with their mrn/birthdate), the process will fail with the generic message you see today. In that case, you should visit
https://account.churchofjesuschrist.org/recovery and enter the email/sms you were trying to use when creating their account. This will walk you through the process of recovering their existing account. At the end, you can see what the username is and/or change the password of that account which should allow you or the child to sign in as that account. Once signed in with that account, you should go to Account Settings (
https://account.churchofjesuschrist.org/membership) and add their mrn/birthdate to that account. Their account when then show up the next time you visit the Children Accounts page on your account as their parent.
Alternatively, you could also delete the child's existing account once you successfully recovered it and are able to sign in with it on the main Account Settings page.
Less recommended, would be on the Children Accounts screen where you are trying to create an account for them, use an alternate email or sms when trying to create and then the create will work, but now they will have two accounts and potentially not the correct email/sms for them - so that's less recommended.
We're working on updating the error message a parent receives so this is more clear in the future.