I have no idea if this will work, because I have no idea what might be cauing the "can't extend pool" message in your particular game, but the first thing I would try is "flatten lot" (or alternately, place floor tiles all along the area where you want the pool, in order to flatten that area.)
If that doesn't work, I would try setting constrainfloorelevation to false and then building the pool. (Turn it back on right after, and test a sim in the pool to make sure they can swim and exit safely.)
Both of those can sometimes cure all manner of weird problems where the game thinks something is not flat enough or deep enough, when it looks like it should be fine to an outside observer. Not sure if it will help in your situation, but it's worth a try.