unable to create sparse bundle image

I'm trying to create a sparse bundle image of 30GB on Snow Leopard. My drive has 150GB free. From Disk Utility, right after the Disk Utility Progress box says "Creating", then "Formatting", then "Finishing" I get the following error message: "Unable to create 'test.sparsebundle.' (Operation not permitted)". I've been googling this for hours and can't figure it out. I tried running hdiutil from a sudo prompt and get the same result. I've repaired and checked disk permissions and have no issues there.