with 2.79, I opened the file below, and saw only wire frame. It's not wire frame mode.
in cycle render mode, the skin adapted properly.
fundamentals-of-rigging_chapter2_lesson3_baker-skeleton.blend
It's not a big problem here, because I can load lesson4-5 version and delete the rig and start new one.
6:01 in the Video explains exactly what duketogo describes above (Just in case you need to watch it demonstrated via video; that typically helps me)
