Settings related to reading QR codes
The solution for your issue can be found on the app's help page. As I already guessed, you need to install a barcode reader app. But not just "any", ist has to be a specific one. And moreover, even my guess for ZXing Reader was absolutely correct – if you take a closer look at the screenshot taken from that place:


Screenshot from the Google Authenticator help page (click image for original size)

Btw: The name "ZXing" stands for Zebra Crossing, but I doubt it can decode the Zebra's natural barcodes :)

As it reportedly works as well in this context, I recommend using QR Droid if you want to use the QR Reader for additional tasks as well. QR Droid has a much nicer interface, offers additional features, and gives you much more flexibility.