The equation leading to this expression of the Catalan generating function is the following :
$$XZ^2-Z+1=0 $$
Where we need to solve this in $\mathbb{C}[[X]]$, the unkown being $Z$.
When we solve it using discriminant (the usual method for equations of degree 2), one must not forget that we de not solve it in $\mathbb{C}[[X]]$ but in $Frac(\mathbb{C}[[X]])=\mathbb{C}((X))$ the field of Laurent series.
As a reminder :
$$\text{ elements of }\mathbb{C}[[X]]\text{ are called formal power series or generating functions and a typical element is } \sum_{n\geq 0} a_nX^n $$
$$\text{ elements of }\mathbb{C}((X))\text{ are called Laurent series and a typical element is } \sum_{n\geq N} a_nX^n $$
Where $N\in\mathbb{Z}$. In other words when you have your two solutions of your equation you get :
$$Z_{\pm}(X)=\frac{1\pm \sqrt{1-4X}}{2X} $$
Now by a straightforward analysis we know that :
$$Z_-(X)\notin \mathbb{C}[[X]]\text{ and } Z_+(X)\in \mathbb{C}[[X]]$$
Since the Catalan generating function has been shown to be a solution of this equation and that it is a generating function by definition, it follows that it cannot but be $Z_+$ which is the only generating function among the solution of the equation.