Now, the only thing left is to add the "muscle" bone to Skin modifier and adjust envelopes.  So go ahead and do that.  Give the vertices around the bicep area some influence from the muscle bone.  My next image shows the influence of the muscle bone.

And there it is.  A muscle bone that squashes and stretches to act like a muscle.
Here's the max file from this tutorial if you want to play with it.

So, to quickly sum up what we did to make the muscle bone. (The bone that squashes and stretches to act like a muscle)

1) Made a bone with an end bone

2) Made a point helper, alligned pivot to pivot with the "muscle_end" bone.

3) Changed rotation controller of the "muscle" bone to Look At Constraint to look at the helper point (don't forget to uncheck "World" and select point helper for your Upnode)

4) Changed "muscle_end" bones position controller to Position Constraint to follow the helper point.

5) Using Bone Tools, changed "Muscle" bone's Stretch setting to "Squash".

So it's actually just 5 pretty quick steps and you have a muscle.  Pretty easy to remember, right?  But if you really really can't be bothered to remember how to make one or just uner a very tight deadline and need a muscle bone really quick.  Let me give you a link and point you to a script that will make your life easier. :-) www.scriptspot.com  When you get there, type "muscle" in to it's search field and look for Muscle Editor 2.13.  That nifty script will convert a regular bone in to a muscle bone for you.  It's written by Yoni Cohen.