| you have to actuelly select part of the piece to modify it. Also, i think you are misunderstanding the meaning of modify. That modify means that it can modify the selection you make, meaning the dotted line that appears when you select something. It will not actually change your piece. If you want to transform your piece go to edit>transform and select something there like free transform or warp or something. Select>modify is only for when you have that dotted marquee around something...
hope that helps...
oh, and if you want to select something to use modify to test it out or whatever, just hold down control and click on the layer you want to select in the layers pallette |