First of all, when trying to run aRts-builder , you should also be running the sound server (artsd). Usually, when you use KDE 2.1, this should already be the case. If not, you can configure the automatic sound server startup under KControl+Sound+Sound Server.
When you are running aRts, it always runs small modules. aRts-builder is a tool to create new structures of small connected modules. You simply click the modules inside the grid. To do so, choose them from the Modules menu, and then click somewhere in the green-grey plane.
Modules usually have ports (where usually audio signals are flowing in or out). To connect two ports, click on the first, which causes it to turn orange, and then click on the second. You can only connect an input port (on the upper side of a module) with an output port (on the lower side of a module). If you want to assign a fixed value to a port (or disconnect it), do so by double clicking on the port.