While the accepted answer shows that one poster did not misspell election, there were other such posters. Even the caption refers to "signs painted all over Tokyo boosting MacArthur". There was even a different sign on another side of the same building.
According to Jack Seward's 1971 book: The Often Misunderstood, Sometimes Surprising, and Always Fascinating Culture and Lifestyles of Japan
A group of ardent Japanese supporters of the already aging general arranged to have a gigantic banner hoisted high over the busy Hibiya intersection in downtown Tokyo, just where MacArthur could see it when he emerged from his office in the Dai Ichi Building. Bearing in mind that the Japanese tend to confuse the "r" and the "l" in English, try to visualize these six-foot high letters emblazed on the banner:
"WE PRAY FOR MACARTHUR'S ERECTION!"
So if the story isn't true it is at least traceable to Jack Sewards 1971 book.
For more on Jack Seward, see his obituary in the Tokyo Weekender
Jack Seward, a legendary authority on Japan and a U.S. military veteran, passed away on November 10, 2010 at the age of 86 in Houston, Texas from post-stroke complications. A man of great intelligence, Jack leaves behind a legacy of international accomplishment and service.
Born John Neil Seward Jr. in Houston on October 11, 1924, ‘Jack’ grew up in Dallas and upon graduating from Woodrow Wilson High School in 1941, started attending the University of Oklahoma. During this period, an act of chance introduced him to his life-long connection to Japan — while spending several summers with his father John Seward Sr. working on the Frank Phillips ranch in Bartlesville, Oklahoma, two Japanese co-workers started to teach him some Japanese language. At the age of 18, he volunteered for active duty in the U.S. Army, and upon discovering his knowledge of Japanese, the Army enrolled him in a special military intelligence training unit on Japan at the University of Michigan Ann Arbor where he graduated two years later second in his class.
Jack served under General Douglas MacArthur’s staff command during the occupation of Japan. This was the beginning of his 25 years spent living in Japan. After his tenure in the Army, he served in the U.S. Central Intelligence Agency as part of their Asian operations ...
In 1963, Jack married Aiko “Jean” Morimoto of Shikoku, and together had two sons. Over the course of these years, he built his reputation as a leading Japan expert and linguist, obtained a doctorate’s degree following post-graduate studies at the University of Hawaii, and also commenced pursuing his interest in writing books...
So Jack Steward was in the position to have personal knowledge of the misspelling event, and repeated this account in an 17 December 1982 article and multiple books, including an illustration in Strange But True Stories from Japan showing the misspelling on a banner streched across a street, which is inconsistent with the sign painted on the building.
Toshiyo Odo was the leader of the 1948 campaign in Japan for MacArthur, and as you can seen below his spelling skills where not the best: "PERSOUNELS", "lipps", "alied", "personuels", "personels", "humouraus", "personnels". If he could misspelll personnel four different ways in one sign, it is possible he could have misspelled "election" in another sign as Jack Seward has stated.