Would like to use Appearance to change my body type, hair, etc., however, I'm getting the message that I'm not allowed to do that????

When you start in the Openlife (your 'birth').

That attractive spandex package you start with isn't editable.

But right clicking your inventory -> create new. and then wear that new item.

These newly created items of your will be editable

There a few pics in the wiki too.