I am trying to install the 960 grid system extension and the extension manager says that DW is still running when its not.

Hello, probably some process of DW is still running if you see this message.
Try restarting your computer and install the extension before you open DW.

I have the same problem and have tried restarting the computer, no help, same error message. I then tried to run the extension manager a an administrator, no help.

Some DW/Adobe process is running probably.
Usually the Adobe IPC Broker process is running even after you close DW. You can kill it in the task manager and try again.