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the hand layer has the outline and the hand color in the same layer, so when you add the instance effect it colorizes the entire layer and all of its pixels.
So remove the layer effects, and use the magic wand tool (tolernace settting can be 1-30) then click on the skin color of the hand to select it and then use Edit>Fill and select Color to choose the color you want.
Hope that helps.
Thank you so much. I'm new to all the adobe programs so it took me a little bit to figure out exactly what you meant. But I got it. Thank you so so much. I was following some tutorials and was like this should be easy but when I followed the directions step by step and it didn't work I was so confused. Again thank you so much!
that's great news Dina! You are welcome. I am so happy I was able to help!