I want to make it so when a character walks, an animation is played (the motion of his hands moving). How do I do this? How do I make the animation start playing and do I have to pre-make the animation of his hands moving before playing?
You really want to ask this in the Game engine support sub forum.
Long story short, you open the action editor, create a new action, animate it how you want and then create an “action” actuator on the root bone with the same action name as the new one you just created. When the actuator is fired off by a sensor, the action plays. Voila!