1) DuIK: Part 1
First of all, the best way to get familiar with DuIK is to download it, install it on your machine (or if in a public lab, nicely ask the lab tech if they're willing to do it) and watch the wonderful video tutorials made my Famos. In fact, I recommend doing that before bothering to read any of this; it will make much more sense. First, install DuIK (you'll likely need to close and re-open After Effects) and you'll find duIK under Window.
2) DuIk: Part 2
DuIK works with two joints, basically, so it's great for arms and legs. First, select the extremity (hands in this case) and click the "Add Controller" button in the DuIK window. This will basically add a small red null object, named that layer's controller. Advice: I don't recommend scaling the controller, at least not for relatively straight-forward puppet animation like this.
3) DuIK: Part 3
The more you do this next step, the more naturally it will come, so don't worry if it seems awkward at first. In the immortal words of Yo Gabba Gabba: "Keep trying! Keep trying! Don't give up! Never give up!" You need to select the layers and controller involved in the limb's movement to add the IK, but you need to do it in a very set order. So select the extremity FIRST (hands), then move up the limb (Lower Arm, then Upper Arm) and last the Controller ("C_Hands Front). Then click the IK Creation button in the DuIK window. If the order was wrong, if the objects weren't parented, or if there are duplicate names ANYWAY in the composition, it'll give you an error to that effect and you'll need to fix it and then try again. But I promise, after you've done this a few times, it's like butter. :)
4) DuIK: Part 4
The last thing you need to do is check the movement. This is where you'll love DuIK and decide that Nicolas Dufresne is a just an all round great human being and deserves some fiscal support. DuIK is Free and licensed under a GNU General Public License, but go ahead and donate something to the guy. He's made life for AE animators a whole lot easier. Anyway, just select the Controler layer (in this case, C_hands front) and move the object; it should move, wow, like a real arm! If the elbow bends in a weird direction, simply click the "Checkbox" in the Effects Controls for the IK Orientation (this is the effect that is added to the controler layer when you click the IK Creation Button) and it'll should bend in the right direction. This, by the way, can be animated, which can be helpful if you need to break limbs. (Students, that's a technical phrase in animation, I'm not just being morbid!)
5) Compositon Settings
If you're like me, you probably cropped the bounds of your photoshop layer out of habit. That's fine, but at this point you may want to go to Compositon>Composition Settings and increase the pixel dimensions of you Comp so that if the character moves arms and legs, they are not cropped off.
6) Import .aep into your .aep
After saving everything, go to File> New>New Project, then go to Compositon>New Composition (setting it to whatever video settings you're using), then go back to File>Import>File and find the character's .aep you just made. It will import this in as a project. Go ahead and save.
You'll see below the Wolf_3_4_Front has imported in as a folder. If I open this, there's a composition. I drag this into my timeline (I imported in a background as well, just to make it less "blah". Students, that's also a technical term.) Scale the image down as you'd like it to appear in the scene.
7) Animating your Character
Control-Click on the character composition in the timeline and select "Open Composition". Now you can animate the character! If I have two characters acting very closely (hugging, for example), sometimes I'll just copy and past all may layers into the main composition (note: you'll like have to delete the duIK controllers and re-do them, but that's not a bad thing to practice.) Generally, however, I use the timeline as a marker for where I am in an animation. So, if a ball drops and hits the ground at 0:00:03:12 and the character needs to flinch around then, I simply put my playhead at that time in the main composition and then click the tab for the character and the playhead will be in at the same time (VERY handy). Then I can animate the flinch, knowing it will happen right as the ball's hit the ground. In this example, however, I'm just making the Wolf raise her hand. Note how I'm just adding keyframes to the position of the controller. You can also use the Motion Sketch with controler position with great results.
8) End Result
Notice on the image above that the playhead is at 0;00;02;28. I simply clicked on the tab in the timeline for my main composition (still named Comp 1) and notice she is in the same position. If you have a character walking, you can have the character walk in place inside it's own composition and then use guides in the main composition to animate the position so the feet don't skate.