Why is the Book of Enoch not regarded as canonical? A short section of 1 Enoch (1 En 1:9) is quoted in the New Testament
  (Letter of Jude 1:14-15), and is there attributed to "Enoch the
  Seventh from Adam" (1 En 60:8). It is argued that all the writers of
  the New Testament were familiar with it and were influenced by it in
  thought and diction. &mdash; Wikipedia


So why is the Book of Enoch not regarded as canonical by major Christian denominations?
Short Answer: The Book of Enoch is not Scripture.  As such, the Holy Spirit did not lead the church to include it in the canon of Scripture.

The Controversy

Jude 1:14-15 says this:


  It was also about these men that Enoch, in the seventh generation from Adam, prophesied, saying, “Behold, the Lord came with many thousands of His holy ones, to execute judgment upon all, and to convict all the ungodly of all their ungodly deeds which they have done in an ungodly way, and of all the harsh things which ungodly sinners have spoken against Him.”


This quote from Enoch is not contained in the Bible, which has led many to wonder where Jude got this information.

In 1956, during the excavation of the Dead Sea Scrolls, a book called "1 Enoch" (a.k.a. The Book of Enoch) was discovered.  (NOTE: The excavation uncovered a variety of texts, many of which were not Scriptural.)

Enoch 1:9 says this:


  And behold! He cometh with ten thousands of holy ones to execute judgement upon all, and to destroy [all] the ungodly: and to convict all flesh of all the works [of their ungodliness] which they have ungodly committed, and of all the hard things which ungodly sinners [have spoken] against Him.


Clearly this is very similar to Jude 1:14-15.  The question is: Why?


Was Jude quoting The Book of Enoch?


If so, does this mean the Book of Enoch should be considered Scripture?

Were The Book of Enoch and Jude both quoting from an earlier text (i.e. the actual account of Enoch)?
Was the author of The Book of Enoch actually quoting from Jude to make their book look more credible?


What we don't know is when The Book of Enoch was written, who the author was, or what Jude was quoting.  :)  (The best I can tell, the Biblical figure Enoch was not the author, but rather, someone who lived closer to the time of Christ, or possibly even after, based on some of the references.)  There are many arguments on all sides of this debate, but the real question in the back of many Christian minds is:

Is it Scripture?

Is this the Holy-Spirit inspired word of God?  This is where we can pretty confidently say "no".  If it were Scripture, we would expect it to be free of false doctrine.  What we find instead is that false doctrine is one of the most prevalent themes in the book!

Taking a cursory look at the text up through Chapter 59, I found the following false doctrines.  (I may be off on one here or there, but it should be sufficient to get my point across.)


1:1  Implies restoration during tribulation - not congruent with scriptures.
1:8  In conflict with the doctrine that peace was made at the cross.  Also, in the last days tribulation will increase for the righteous - this "verse" seems to dispute that.
2:2-3  Appears to contradict 2 Pet 3:3-7
5:4  Is an admonition to some unknown party - this is very irregular relative to the scriptures (i.e. authentic ancient writings by God-fearing Jews)
6:3  Semjaza seems to be listed as the leader of the angels, which is not scriptural
6:3,8  None of these angels are mentioned in the Bible
8:1  Azazel isn't even listed in 6:8 as one of the angels that fornicated with women
8:3  Araqiel and Shamsiel aren't listed in 6:8 either
10:2  Enoch allegedly wrote about Noah, even though the Bible teaches that Enoch was taken up to heaven years before Noah was born.
10:4-6,12  Implies angels can be bound &amp; hid in holes under rocks.  This is contrary to scripture.
10:8  Ascribes all the sin of the fallen angels to one named Azazel - not scriptural.
10:15-11:2  Seems to imply that permanent restoration took place after the flood - clearly not true.  It seems the true author of this book confused scriptures pertaining to the future restoration.
13:5-6,14:4-5,7  Implies fallen angels can't talk to God - this contradicts Job.  Also implies that angels were repentant, but weren't received back by God - very strange doctrine.
14  Gives a very strange description of Heaven that conflicts with many scriptures
15:8-10  Very strange doctrine about "evil spirits" proceeding from unredeemable giants
17-18,21,23  Gives a very strange description of the earth &amp; universe which is clearly not true.  Also alludes to the ancient model of astronomy that held that there were 7 stars (the closest planets) which burned like the sun (they don't.)
19:3  Discredits all other prophecy about the consumation of the ages.
20  Lists strange angels not in scripture, and incorrectly assigns the roles of Michael (the warrior) and Gabriel (the messenger)
21:7-10  Seems to contradict Biblical descriptions of the present &amp; final judgement places for the fallen angels
22  Contradicts the Biblical descriptions of past, present &amp; future dwelling places for the righteous who die
32:2-6  Seems to imply the Garden of Eden was still in existance after the Flood
33:1-2  Says Heaven rests on a foundation that is at the Eastern edge of the earth
33:3  He claims he counted the stars &amp; individually mapped them, which is impossible scripturally (&amp; scientifically)
34  Says the winds come out of a "portal" at the Northern edge of the earth
36:3  Says the stars come out of portals at the Eastern edge of the earth &amp; move West
38:5-6  Contradicts Daniel &amp; other prophecies about the Mellinial Reign
39:1-2  Very strange implications here about the "seed" of angels dwelling with men at the end... this contradicts the scriptures
40:7  Talks about the "Satans" - plural, different than the Bible, who gives that name to only one fallen angel.  Also, implies Satan can't stand in God's presence, contrary to Job.
40:9  Once again mixes up the roles of the 2 Archangels &amp; adds more names in.  Michael's role in scripture is related to conquoring nations &amp; fighting spiritual wars, while Gabriel's relates to bringing messages &amp; visions to people.
41:1-2  Says the Kingdom of God is divided - it's not &amp; can't be scripturally.  Also describes sinners being repelled from a mansion, which is also not scriptural, unless you look at a parable Jesus told, which was not intended to be literal.
41:4-5  Says the sun, moon, winds, etc. are stored in chambers &amp; released at appointed times.
41:6-7  Implies the sun &amp; moon move opposite of each other
43:1-3,44  Very weird model of the nature of stars &amp; lightning
47:4  Says God requires the blood of the saints... very strange
51:1  Says Sheol &amp; Hell will give back to the earth, which isn't scriptural - also Hell is a NT term, not OT
51:2  Disputes the Biblical doctrine that we are chosen.  (We don't have to wait until Christ's return to be chosen.)  This isn't scriptural.
General:  Seems to imply Enoch came back down to earth after being taken up to Heaven, which is not scriptural.


Summary

I think Paul's words are very pertinent here:


  As I urged you upon my departure for Macedonia, remain on at Ephesus so that you may instruct certain men not to teach strange doctrines, nor to pay attention to myths and endless genealogies, which give rise to mere speculation rather than furthering the administration of God which is by faith. But the goal of our instruction is love from a pure heart and a good conscience and a sincere faith. For some men, straying from these things, have turned aside to fruitless discussion, wanting to be teachers of the Law, even though they do not understand either what they are saying or the matters about which they make confident assertions.