An error message should display or should 'be' displayed?

Solution 1:

Reg is right that the middle construction "the message should display" is grammatical and would be understood; but it is not how "display" is usually used in English.

"Display" is normally transitive, though the subject can be either the person or thing that causes the message to appear ("the program displays a message") or the surface or medium on which the message appears ("The screen was displaying a warning message").

The only intransitive use I can think of is the special sense of birds or animals showing some prominent feature as part of combat or mating rituals: we can say "The cock displayed to the hen".

Solution 2:

In short, you are correct. Display is a transitive verb (it requires an object) and the object here is the error message.

The form an error message should be displayed is an example of the passive voice. It's useful here because you want the focus of the sentence on the object and the passive voice allows you to omit the subject completely, or link it with a preposition, for example an error message should be displayedby the program

The active alternative would be the program should display an error message.