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To change what your character is using, hit the 'Equip' button from the 'View Character' screen. From there, you will be able to select what equipment the character will use. You can have the character wear something currently being carried or instruct the character to take something off. After you've hit the 'OK' button, the changes will take effect, and your weapon class and armor class values (and any other attributes that might be affected by the change) will be adjusted accordingly.
Some items have special properties that you can only take advantage of if you wear them. Check the 'Examine Inventory' screen to look at the properties of the items you are wearing and carrying.