This error indicates that "single app mode" could not be established on the iPad.
The following steps should be taken:
1) Uninstall the LockDown Browser app completely.
2) Download the LockDown Browser app and install from the Apple App Store app.
3) Restart the iPad.
4) Attempt your exam again, but be sure to first access the course, then the content area (or module) containing the quiz. Do not try to take the quiz from any link in the "grades" area of the course.