I am running on Sitecore CMS 7.2, and Sitecore PowerShell Extensions 3.0. After installing the powershell extension module, Publishing site is always failing. I tried re-install on a vanilla Sitecore instance, but no luck. There is still having the same error. I researched online and found it was caused by script library item, which is an known issue. To walk around. I just need to mark the /Sitecore/System/Module/powershell/Script Library unpublished.