First we recall a standard fact: $ \mathbb{P}^{n-1}_{\mathbb{Z}} $ represents the functor which sends a scheme $ Y $ to the data $ (\mathcal{L}, s_1, \cdots , s_n) $ where $ \mathcal{L} $ is a line bundle on $ Y $ and $ (s_1, \cdots, s_n) $ are sections generating $ \mathcal{L} $. The equivalence relation is given by $ (\mathcal{L}, s_1, \cdots , s_n) \sim (\mathcal{L}' , s_1', \cdots , s_n') $ iff there is an isomorphism $ \beta : \mathcal{L} \rightarrow \mathcal{L}' $ such that $ \beta(s_i) = s_i' $ for all $ i = 1, \cdots, n $.
Suppose now that the functor in question is represented by a scheme $ Z $. In view of the above remark we see that there is an obvious morphism of functors $ \eta : \mathbb{A}^n - \{ 0 \}/\mathbb{G}_m \rightarrow \mathbb{P}^{n-1}_{\mathbb{Z}} $ such that $ \eta(Y) $ is an injection for every scheme $ Y $. By the Yoneda lemma, $ \eta $ corresponds to a morphism of schemes $ \phi : Z \rightarrow \mathbb{P}^{n-1}_{\mathbb{Z}} $which is a monomorphism simply by the above remark.
Furthermore, for any field $ k $ and for any local ring $ R $, the maps $ Z(k) \rightarrow \mathbb{P}^{n-1}_{\mathbb{Z}}(k) $ and $ Z(R) \rightarrow \mathbb{P}^{n-1}_{\mathbb{Z}}(R) $ are bijections. This is because every projective module over $ k $ or $ R $ is free. (Line bundles correspond to projective modules)
The previous remark about fields and local rings, applied to a valuation ring (and its field of fractions) immediately shows that the valuative criteria for properness holds for $ \phi $.
So $ \phi $ is a proper monomorphism, hence a closed immersion.
(See the stacks project tag 04XV for a reference to this fact.) Noting the fact that $ \phi $ is obviously surjective (being a bijection on field valued points) and that $ \mathbb{P}^{n-1}_{\mathbb{Z}} $ is reduced, we conclude that $ \phi $ is an isomorphism. (Closed immersion + surjection onto a reduced target implies isomorphism, easy to check locally)
In summary, we get $ Z = \mathbb{P}^{n-1}_{\mathbb{Z}} $ which is obviously wrong as there are many schemes with non-trivial line bundles having a generating set of size $ n $. So the functor in question is not representable by a scheme.