Turns out that a RAID controller firmware update was required. I had another unit with older firmware that did not give the error so it was just the firmware version this unit had applied that was the issue. Thanks to Alex.Gregory[NAME].com who put me on the right path.
Hello all. I have a MD3260 and associated MD3060e fully populated with 120 physical discs. I currently have a disk pool configured with 88 physical disks and a 4 disk preservation capacity. When I attempt to add even a single unused physical disk I get the error Error 749 - The operation cannot complete because the disk pool limit would be exceeded. Which is odd as "Each disk pool must have a minimum of eleven physical disks. Although there is no limit on the maximum number of physical disks that can comprise a disk pool, the disk pool cannot contain more physical disks than the maximum limit for each storage array." Where is this limit coming from? 
Error 749 - The operation cannot complete because the disk pool limit would be 
exceeded.