How would I make the arms look less “detached” from the body?
what is the rest position?
Straight, hands pointing down, head forward
It’s this thing
http://www.minecraftforum.net/topic/9581-minecraft-blender-rig-–-show-off-your-skins-in-style/
but it modified with more loop cuts to make it smooth and the armature moved a bit.
In the original, those bones had location locked (N to get panel in 3D viewport) so you could not move them away from the body like you did. Perhaps at some point in your remodeling, you unlocked them and forgot to re-lock them before you started posing your figure.
No, they are still locked.
Never mind, I got it. The ball thing on the armature was just too high.