It's not that Human Transmutation is impossible in the sense that it doesn't work, it's just that it very very rarely goes the way people want it.
as with any other Transmutation, Human Transmutation is still governed by the law of Equivalent Exchange where the input must be equal to the output, failing to do so results in a rebound where the transmutation forces are thrown out of balance.
In the manga, it is determined that resurrective Human Transmutation is impossible because a soul that has left the mortal coil has passed on into the afterlife and can never be called back by human means. The attempt will cause a rebound due to both the inherent lack of any particular substance able to match a human soul in value and the fact that the initiated transmutation is reaching for an unattainable goal. Of the known attempted Human Transmutations, the rebound has been the "taking" of parts of the initiator's body out of the living world and into the void of the flow (in the case of the Elric brothers' attempted transmutation of their mother, Edward's left leg and Alphonse's entire body were taken and in the case of Izumi Curtis' attempt to revive her dead child, several of her internal organs were taken). It should be noted that the size of the body parts taken are generally equal to the size of the human being transmuted, in accordance with the law of Equivalent Exchange.
Source: Alchemy > Human Transmutation > Resurrection (2nd paragraph)
Remember that with both Trisha Elric and Izumi's child both showed signs of "life"
as for how the body was still alive years after, we can suspect it was more because of a Soul Binding or something similar
Rosalie leads Al to a room with what appears to be a little girl's shriveled corpse inside. She reveals this as the result of the real Rosalie's transmutation, while she herself is a girl named Amy, who was adopted due to her similar appearance to Rosalie. Alphonse is surprised to learn that it is not in fact a corpse, but is alive, in a way similar to him.
Source: Bonus Episode: The Blind Alchemist > Synopsis
and in the manga, when Ed exhumes Trisha's body which Pinako buried, Ed learns that what it wasn't Trisha that he and Al resurrected as her hair colour and bone structure were different, so the "life" in Rosalie may have not really been her but some other soul if the body was comparable to a suit armor like Al's (in this case, a suit of fleshy armor)
Ofcause there's also the possibly that what "life" there was in Rosalie was not even human as showing signs of life doesn't equal being human as the Homuncli aren't human and Father's/Dwarf's body is described by Van Hohenheim has being a Leather Bag no different from his original flask
