I'm afraid you've fallen over a requirement that Apple has recently introduced. The iPhone plays podcasts by using 'byte-range requests', which means calling for part of the file at a time rather than the whole thing. Unfortunately some servers don't support this, and there were an increasing number of complaints that podcasts which worked elsewhwere weren't working on an iPhone.
So Apple are now making the ability to handle this a condition of submission. Evidently your server doesn't support this, so all you can do is to ask them whether they can implement it. If not, you will have to find another hosting service - ask about this before committing yourself, and if they say no, or don't know what it is, find another host.
It's certainly not a technical requirement for subscribing directly in iTunes - the only place it's a requirement is when an iPhone plays podcasts - but Apple are now making it a condition for submitting new podcasts. If you want to forgo the Store and simply give people the feed URL to subscribe manually it won't be an issue.