Probably because you are editing a Word 2003 document and in Compatibility Mode. The 2007 equation editor is grayed out when in compatibility mode.

Solution: You either need to convert a 2003 equation (i.e. from Equation Editor 3.0)

or, open a new 2007 document and make the equation in that.

or, save your 2003 document in 2007 mode and lose some measure of compatibility