Okay so I made a little character on Photoshop, then moved it onto after effects. The character had many layers. How do I - let's use the arm as an example - move the arm's layer separately?
You should import your Photoshop file as a composition retaining layer sizes. Then, and this step is missed by many folks just starting to use After Effects, open the composition that is created from your Photoshop file and then start breaking down the various layers into usable groups.
There are many resources out there for doing character animation in After Effects. Here is one of the best: