If you get this message when you sign up, it means you already have an account using that email address. (Perhaps one you registered and forgot about.) If you don't remember the password, you can reset it by going to www.instapaper.com > Sign In > Forgot password? > Entering your email to receive a password reset link.
If you want to get rid of the old account, possibly because you’re renaming another one to that email address, you can rename or delete the old one from the Account screen (www.instapaper.com/user) when you’re logged into it.