Question

Why was Penn’s location for Philadelphia contested?

Answer 1

The leaders of Maryland claimed the land Philadelphia was on was located in Maryland.

Answer 2

Penn adopted  Quaker doctrine.

At that time, the government does not allow any religion beside the religion that is preached by the church of England, which made penn subjected to prosecution and jailtime.
If penn move to philadelphia, he could avoid the prosecution because it is not in the jurisdiction of england legislation. to avoid this, the position was challenged by the government.