I finally found the solution to this problem. This will happen when SharePoint will store the .xsn file under FormServerTemplates but does NOT associate an item to the file. Hence the error in the log when trying to activate the feature.
To fix this, you need to make the .xsn file ghostable in labrary by adding a type attribute to the elements.xml file, like so:
<File Url="MSOR.xsn" Name="MSOR.xsn" Type="GhostableInLibrary" />
Hope this will help someone else.
Thanks