I have seen reports of this bug already from 2 years ago, but it doesn't look like it ever got fixed.

Steps to reproduce:

1. Purchase the LEGO Minecraft Dragon Slayer set
2. Find the brick with the code on it, and redeem it
3. Download and set your skin to the LEGO Minecraft Dragon Slayer

You can see that the attached skin texture has no issues with it, but i have also attached an image of the broken texture in-game.

UPDATE: Apparently, this happens on all versions of the game, even on the 3DS! I imported the skin unofficially, see this video: https://www.youtube.com/watch?v=zpUeEvCYXRE

I think there is something wrong with the skin file maybe? I got the skin file from the official pack. Or maybe Minecraft glitched because of a certain set of colors in one area or something?

ANOTHER UPDATE: I think the issue is that the skin is automatically set to the slim arms style (like Alex), and it is supposed to be the full sized arms style (like Steve). I tried importing the skin into a skin editor, and it automatically sets the style to full-sized arms. I noticed that the holes in the hands (like a LEGO Minifigure's hands) look correct, unlike the slim-arms one (attached below). I can also see that in the skin file, the arms are 4-pixels wide, and not 3.

I think all that needs to be fixed is the skin needs to be updated and automatically set to full-sized arms, or updated to have actual slim-arms.

The advertised skin has 4-pixel arms, lol (see attached image)