Not just your health but they make sure you're not being economically coerced, that you have your own support system and coping skills etc. Since you're having major surgery with no benefit to yourself they want to make absolutely sure you're going to be okay, and the bias is to fail you out as a donor if they're not dead certain that you're an excellent candidate.
I was rejected due to a fairly minor health problem found in the screening process, even though my specialist insisted I'd be fine for surgery with only minor changes in medication. At the time this decision was made it looked likely my family member would die without my liver donation (turns out he survived to get a deceased donor and he's doing great.) *Most* potential live donors are rejected.
I don't know this gentleman's circumstances, but there may have been concerns that he didn't have help or resources for the postsurgical period (ie could he take time off work, would taking time off work further interfere with his probation, could he support himself and his family while recovering from surgery) or if his legal troubles involved a drug problem there might be concerns that postsurgical pain killers would put him at high risk of relapse, or that his lifestyle would put him at unusual risk with only one kidney. And of course incarceration itself is a risk: you can't even donate blood for a good long time after being locked up because the risk of disease in prison is so high.
I can't say. But I'm not surprised somebody whose life was that unstable was rejected as a donor. They fail people out for a lot less. Rather than going to the media to rail at the injustice of it all and rattle the gofundme cup I wish this family was going to the media to find their kid a live donor kidney, the article doesn't even say what blood type he is let alone who to contact at Emory if one wishes to be evaluated as a potential live donor.