Attach the upper arm pieces to the torso as shown. Then, put gray connectors (picture 3) into the middle hole in each arm.
Step 2: Begin building the mechanism
Put the knobs and rods in the back of the torso. Next, attach the black connector pieces.
Step 3: FInish the arm mechanism
Finally, add the double gear-shaped stick, and connect it to both the arm and the black piece.
Step 4: Add finishing touches
You can now add things such as a head, forearms, etc. to make it more human-looking. Also, you can add gears in specific positions to make them move when you move the arms: a very mechanical-looking touch that also assists movement if done properly.