I loaded the datetime library and example program to the arduino board. I then ran the program to set the time in processing, and the box with the white text (Mouse click to set arduino time), and I click but it does nothing. What am I doing wrong?

is the serial port in the Processing sketch set correctly to the port the arduino is connected to?

Running the Processing sketch prints the name of the port it is using, the tools/serial port menu option in the Arduino IDE shows the arduino serial port. If these are different then the time will not be set.

Good luck!

If you plan on using processing in your app, it can read the time from your system clock just FYI.

Thanks! Yeah, I had the wrong port selected, I believe it works now. On a side note, while the program is running can I change the values of the time variables manually? e.g. use a button connected to one of the IO pins to increment the hour variable by one, making in manually settable?

Yes you can change the time manually using buttons. I posted a sketch in this thread: