Multiple-input multiple-output (MIMO) systems employing adaptive modulation have been widely used for their potential to optimize the spectral efficiency while keeping the bit error probability (BEP) under a certain target level. In this paper, we examine a MIMO system using square orthogonal spacetime block codes (OSTBCs) with rate-adaptive M-QAM and operating over arbitrarily correlated Rayleigh fading channels with imperfect channel estimation. Assuming finite-rate feedback without delay, we derive accurate closed-form expressions for the average BEP, spectral efficiency and bit error outage of our system. The presented expressions allow to easily study the impact of channel estimation errors and fading correlation on the performance of rate-adaptive MIMO OSTBC systems.