Armature not working when trying to rotate using the mouse? When I am trying to rotate the bone on the armature, I am getting the arrows to rotate the bone but the bone is not actually rotating.  

I have tried parenting the armature to a character and it is still doing the same thing, the bone will not rotate with the mouse but it will rotate when using the XYZ rotation values. 

Blendfile
That's because you enabled Manipulate center points in the header. Click that icon to toggle it off, or press Alt, (comma).