Mesh deform and armature problem

I’m doing a tutorial here: After I replaced the shape keys with custom bone shapes for the body (head) mesh deform modifier and added a mesh deform modifier to the jacket, my deform armature for the head and arms aren’t working right. The head wont move at all, the arms will move but won’t rotate with (IK hand bone). Can someone tell me what I did wrong? I don’t know if my problem is with the custom shape bones (sphere empties) or with the jacket mesh deform modifier. Maybe both. I am not clear on how the mesh deform modifier works, but I think I followed the directions.

Blend file:

I am not a rigging wizard, so I could be wrong, but I think when using the mesh deform modifier, it is the cage mesh, not the character, which should be parented to the armature. I am guessing your mesh deform modifier is over-riding your armature. also, try changing the order of the modifier stack, and see is that does anything.

Thanks for responding. I went back and did it over again. (yet again). This time it worked. I must have missed something. But I don’t know what.