(FE) Why won't my horse work after being moved from a tool to the Workspace?

You can read more about FE right here. In short, it seperates the client from the server. Although it shows you the new horse spawned in the client, it is not actually in the server, making the seat not actually exist. The seat is a server sided item. In order to fix this, simply use a remote event. You can read about them here. Here is an example of a basic way to make your code work, using remote events:

-- local script inside of 'bin'
bin = script.Parent
local remote = game.ReplicatedStorage['Name of your remote']
function onButton1Down(mouse)
    remote:FireServer(bin) -- pass the argument bin, as it is needed in the code
end

function onSelected(mouse)
    mouse.Button1Down:Connect(function()  -- make the c a capital C in Connect.
		onButton1Down(mouse) 
	end)
end



bin.Selected:Connect(onSelected)

Then, a server sided script (Just place this script under ServerScriptStorage):

local remote = game.ReplicatedStorage['Name of your remote']

remote.OnServerEvent:Connect(function(Player, bin)
	local model = bin.Horse:Clone() -- Make it Clone, not clone
	model:MoveTo(Player.Character.Head.Position + Vector3.new(0, 0, 5))
	model.Parent = workspace
	model:MakeJoints()
	bin:Destroy() -- use Destroy, not remove, unless you actually know the difference and have a good reason for it (unlikely)
end)
    

I hope I helped, and have a good day!