This tutorial requires some basic knowledge of constraints and bone heirarchy in AM. The goal of this setup is to restrict the elbow's rotation to one axis, while still allowing for the freedom and convenience of IK animation.

1. Geometry Bones
After modeling your arms, create a three-bone chain (typically labeled Right Bicep Geometry, Right Forearm Geometry, and Right Hand Geometry) starting at the shoulder and ending at the hand. In most situations, you then parent the Right Bicep Geometry to a bone labeled Right Shoulder.

The character on the left side of the image shows a typical starting position for character arms. The character on the right is the starting position that I use for my characters because it is a more accurate midpoint for the shoulders' movements. The following tutorial will work for either method, but I will use the typical example on the left side to explain the setup.

2. Roll Handles
Make sure that the roll handles are all facing forward, parallel to the X axis. This is important because the ELBOW target will control the direction of these roll handles when we are finished, so if they are not pointing at the elbow target to start with, it will cause a degree of inaccuracy in how the arm twists.

3. Control Bones
Next, make exact copies of the bicep, forearm, hand geometry bones, and name these copies Right Bicep Control, Right Forearm Control, and Right Hand Control. The quickest way to copy bones is to simply drag them into a new model, and then drag them back into your original model. Rename the copied bones as indicated above, and then double-check to make sure that these roll handles are also facing forward.
The Right Bicep Control bone should also be parented to the Right Shoulder bone, and at the same level of hierarchy as the Right Bicep Geometry bone.

4. Elbow Target
Control click the model and select New / NULL. Rename it Right Elbow Target, and drag it onto the Right Bicep Control bone (thus parenting it to the R Bicep Control bone). IT IS CRITICAL that the Elbow Target be parented under the Bicep CONTROL bone! Now (in bones mode) move the Elbow Target up to the exact heighth of the bicep bone, which will align it to the same axis that all of your arm roll handles are on. (I like to type in these bone and null positions numerically for accuracy.)

Move the Elbow target out in the direction of the bicep roll handle, but much closer than I have it positioned in the picture. (1)

5. Constraint Pose
Create a new pose, and name it Arm Constraints, or something. In this pose, click on the Right Elbow Target and apply a "translate to" constraint to the Right Forearm Control bone. You should instantly see the Elbow Target snap to the elbow. (2)

Now, In the "translate to" options box, set the Z offset to the approx.length of the forearm, which is 9 inches in my case. Now you should see (3) the Elbow Target snap close to the wrist. Now set the percentage to about 50%, (possibly tweaking it to 55% if the bicep bone is a little longer than the forearm) so that the Elbow Target floats a couple inches in front of the elbow. (4)

The above constraint guarantees that the Elbow Target will always be positioned exactly between the bend of the bicep and forearm bones.

6. Final Steps
Apply an "Orient Like" constraint on each of the bicep, forearm, and hand geometry bones to their respective Control bones. Then, apply an "Aim Roll At" constraint on both the bicep and forearm geometry bones (but NOT the hand) to the Elbow Target.

Now just hide the geometry bones, and you are finished! You will still need to make either mid-bones or smart skin for the wrist and shoulder rotation, but the elbow itself will never break its anatomically correct movement. Next, repeat this set up on the left arm.

This same technique can be easily applied to the knees, but remember that the roll handles need to face towards the back of the model.