The cause of this issue most probably due to the license server ordering by default was incorrect. Please check out a Solidworks standard license instead of a Solidworks Premium (or higher) license by default. The end user is able to fix this issue with the following steps:
1) Click on the down arrow next to the help (?) icon on the top toolbar on the right hard corner,
2) From the dropdown menu, select the SolidNetWork License Manager option.
3) Navigate to the “License Order” tab and select the SOLIDWORKS Premium (or higher) license option.
4) Click the “Move Up” button, until the SOLIDWORKS Premium (or higher) license option is at the top of the list.
5) Click OK button, and exit SolidWorks.
6) Re-open Solidworks.
At this point, the correct license (not standard) should be checked out, and the Simulation add-on can be enabled and should work with no issues when attempting to create a custom material, or selecting a pre-made material.