ToME: the Tales of Maj'Eyal

So I had an Ogre Sun Paladin who got Premonition from an escort. At one point he had exactly 120 maximum mana available, and when I tried to activate Premonition it would immediately deactivate and go on cooldown.

Bonus issue: Setting it to auto-activate and then resting resulted in infinite resting.

You need enough current (not max) mana to activate the talent. Classes that don't naturally regerate mana would need a Manasurge rune or an item with mana regen in order to regain their mana if it gets drained or whatever. Your resources will also restore to full when you level up.

Current mana at time of activation was also 120, as I had no other abilities that used mana.

This is absolutely intended behavior. Having 120 mana and a 120 mana sustain means you have 0 mana, mana based sustains turn off once you hit 0 mana. It's not a bug.