"We are very surprised with this ruling," Alan Chinula, Madonna's attorney, tells Us.
On Wednesday, Chinula told Us he didn't see "any law in Malawi that [could] stop" the adoption. But Judge Esme Chombo cited requirements that adoptive parents reside in the country for 18 to 24 months.
Human rights groups, which had charged Madonna was using her celebrity status to bypass laws, are cheering the decision.
"The judge has sent the right message that we have laws in Malawi that have to be respected," Undule Mwakusungura, the chairman of the Human Rights Consultative Committee, tells Us.
"We can't just have people flying in and out with our children without procedure," he adds.
In her ruling, the judge points out Madonna arrived in Malawi just last Sunday, and hadn't been in the country since she adopted David Banda, 3, in 2006.
"Madonna may have the best interests for the girl, but pedophiles may take advantage of adopting here if we allow procedures to be bent," added HRCC Executive director Mabvuto Bamusi.
But Women and Child Welfare minister Anna Kachikho, who oversees the country's adoptions, says she's "shocked by the ruling.
"I don't see what's wrong for Madonna to take one child as her own," she told Us. "She has not used the back door."
Kachikho points out the singer's organization Raising Malawi is assisting over 25,000 orphans in the poverty-stricken nation.
The country's information minister Patricia Kaliati said yesterday: "We support her adoption process. Madonna's been good to us ... and she's proved she can take care of David."
So why was Madonna allowed to adopt David but not Mercy?
"It's a shocker, but [Chombo] belongs to the old school; she is very religious and a moralist," a source at Malawi's High Court tells Us. "She might not be in favor of Madonna's lifestyle of getting in and out of relationships and her semi-nude stage antics."
Madonna divorced Guy Ritchie earlier this year not long after Us Weekly first reported she'd been spending time with New York Yankee Alex Rodriguez. She was most recently linked to 22-year-old model Jesus Luz.
Photos: Madonna in Malawi