Hey Buzz!
Yes, it is missing parts of the arms. If this was before introduction to the tank, and the wound is closed, then I am not terribly concerned (lots of things bite the arms off in the wild). If it has lost arms after introduction, then this is not a good sign...however, otherwise it is behaving normally.
Raphael,
From your description, it sounds like a juvenile Echinaster sentus, but impossible to know without a photo. They don't really like light, and so may seek cover, but I am not aware of them burying themselves in the sand. This doesn't seem right (but is normal for Luidia like the one above). If you can get a photo, it would help. Echinaster is probably reef safe, and similar to Linckia in their requirements (meaning large mature reef tank because they typically will not take to any foods you put in). But I make no guarantees, and really can't identify it better without a photo.