Summarize:

(Temporary) Select an area you wish to color with the magic wand tool, and color it in. The magic wand will not let you color outside of lines, so you need to select each area you want to color. You may also want to return the "lineart" layer to above the "color" layer, so the lines aren't distorted.
Create a new layer, and block off any open areas, such as the hands and torso. Return to your color layer. Delete the "capped" layer and you should end up with this.