I don't know why this would happen, unless someone is manually extracting a mod into an additional folder, e.g.
/mods/FavorMod/FavorMod
instead of just
/mods/FavorMod
If this is the case, and the mod_info.lua is found in the inner folder inside the first one, the solution is as simple as pulling the inner folder out into the /mods folder and deleting the empty folder. If they're named the same, you'll have to rename the outer folder to something else before moving the inner one out, e.g.
/mods/DeleteMe/FavorMod <-- then copy this folder back out into /mods and delete the (now empty) one that you renamed
In SC:FA, this would usually just cause the mod to not function, and any mod that depended on it to spew a bunch of errors. I don't know why it would actually cause Demigod to crash.
Regardless, this should never happen when using an installer, unless the installer is doing something really wrong (not likely).