Now the "muscle" bone will keep looking at the "muscle_point" helper.  Now what we need is for "muscle_end" bone to follow "muscle_point" position.  So to do this, select "muscle_end" bone and go to Motion Panel again.  Assign Position Constraint Controller to it's Position Transform.  Now click on "Add Position Target" and select "muscle_point" helper.  Below is an image of what I have in motion panel for "muscle_end" bone.

Almost there.  If you move around either "muscle" bone or "muscle_point" helper, the "muscle" bone still doesn't squash and stretch.  To make it squash and stretch, select the "muscle" bone.  Go to Character/Bone Tools.  Bone Tools floating window will pop up.  Open "Object Properties" roll out and uncheck "Freeze Length".  Under "Stretch" check either Scale or Squash.  I usually use Squash as it keeps the volume of the bone.

Now grab either the "muscle_bone" or "muscle_point" and move it around to see the effect.  It should now squash and stretch as you move it around.  Now link the "muscle_bone" to "bicep" bone.  And link "muscle_point" helper to "forearm" bone.  Rotate the "Forearm" bone to see how "muscle_bone" squashes and stretches.  At this point you can play with position of the muscle bone and it's point helper to find a good position for it.