I've got the extension working here on a 3.1 install, so that probably doesn't matter. It looks like you haven't changed a variable in site.ini (or site.ini.append).
In site.ini, there's a section called [ExtensionSettings]. The variable "ExtensionDirectory" needs to point to the folder under the ezp root where you install the extensions.
A second setting in site.ini is ActiveExtensions[]. Add one line to site.ini with this content: ActiveExtensions[]=glossary.
Also don't forget to change the AutoLoadPath in site.ini in the wy mentioned in the readme.