I received a letter from a local PD that my app is deemed inactive because of admissions on the poly.
Can I dispute this?  If so, how?

Thanks

You can appeal it, infact with almost all government type jobs you can appeal any decision made to the human resources department.  Unfortunately, I can flat out tell you that you ar enot going to get anywhere on this.   

When they disqualify you for making admissions during the poly, you have already answered those questions on paper and signed your name to them on the Background questionnaire.  If during the poly your answers to those questions change, it shows dishonesty on your part.   

Infact, many times people who have applied at the department I am at were dq'd due to admissions during the interview phase.  Sad thing is the things they didn't list on the questionnaire were not going to disqualify them, but by omitting them they fail to fall under the "good moral character" section that most departments use.

Apply again elsewhere and DON"T LIE.

good luck.