It may be just me, but it looks to me like the rubbery "skin" is twisted. Does the elbow still bend as it is supposed to? If so, remove the hand and bracelet, and gently correct the "skin" sleeve twisting.
If the elbow is not bending in the correct direction, then part of the upper arm must have rotated. Bending the elbow for leverage, rotate it to face the right way -- gently, lest you exacerbate the twisting of the "skin."
Also, go study the photos of the stainless steel skeleton in the TBLeague Body Catalog sticky thread -- and any additional links posted for that there. It might give you an idea of what is going on.