You are getting an error because you are in "Quick mask edit mode". There are few ways to exit. You can, for example, use [Q] button or delete layer as well.
All have been listed on blog.i-evaluation.com, article: “Could not use move tool because the target channel is hidden” – Photoshop Warning
Hope that helps!
ps. My first post on adobe forum. Hope I helped someone.
Every time I selected a layer, it automatically selected only the alpha channel. I had to press cmd-2 to select RGB each time, ugh. But pressing [Q] completely solved this for me! Quick mask edit mode, you sly villain. Thank you IEvaluation!