1) It depends on what skin color you set for your player. The first number go from 0 (lightest skin) to 4 (darkest skin), and the second one is related to muscle definition with number 2 being the most muscled arm. So arm11base means: white skin (color 1) with medium muscle def.
2) When you say 'extracted', you mean using the FshX tool, right? After saving as .bmp you can edit on photoshop (creating different layers for the tats, so if you make a mistake you don't lose the skin background) and save as .bmp after you're done.
3) Open FshX and your jojohns_arm_tat again and click on texture > import and select your created .bmp and click 'open' then save it. Now put it in the sgsm folder. Make sure you did the right texture resolution. If the tats are on the wrong side of the arm, then you'll need to decrease from 512x512 to 256x256 (Just press Half resolution).
i don't know what you mean by "I later made him into an "original" player so his pic shows up".
If this tattoo is to appear on a player already in the game, there's no need to edit appearence.dbf. If he's created, then you have to edit some fields in players.dbf and appearence.dbf so that the game reads him as an original player.
Hope it helped a little.