The correct position for the right arm is illustrated in Photo A. Notice that the forearm rests on the upper edge of the guitar, just below the elbow. Be careful not to have the elbow hanging over the face of the guitar or your hand too far along the fretboard (Photo B).
The left hand fingers are numbered as such:
Your fingers should be on their tips and placed just left of the frets (not on top of them).
Be careful not to allow the thumb to hang too far over the top of the neck (Photo C), or to let it run parallel along the back of the neck (Photo D).