Used as an exclamation when noting an obvious or moronic error in judgment. Usually suggesting complete unworkability. Also used to designate a situation one tries to take advantage of, where there is no actual advantage to be had.
#1: "I really thought my new pet snake and my hamster would get along. Well, I guess you can't milk a horse."
#2: Jerry - "So I tried to milk this horse and well... you know what they say: 'You can't milk a horse'."
#3: Fred - "I just tried to hit on Nancy at her ex's funeral, but ya can't milk a horse."
#4: "I invested $8,000,000 on the new line of Pogs
, but goddam: Ya can't milk a horse!"