Sim's waist missing after recolouring a long skirt

It's the alpha channel of your diffuse. Export the diffuse from the EA skirt you cloned and copy and paste its alpha channel into a new image then copy and paste the alpha channel of your recolor into that same image. You can then compare them and see for yourself. The white portion of your alpha channel does not extend as high as the EA one.

When it comes to the alpha channels of diffuse textures, black = invisible and white = opaque. Grey is anything in-between; the darker the grey the more transparency your item has. The lighter the grey the less transparency your item has. Again, I'm referring to the diffuse.

Also, it looks like you are about my age which is cool. I'm not the only one who is middle-aged. 

I'm 54 and, man oh man, staying young isn't working for me, lol.

Anyway, you don't even have to use a DDS file if you don't want to. I use DDS files because...force of habit from my TS3 days, I guess. Since it's just a straight recolor you can just copy and paste the alpha channel from the original skirt into each of your recolors then save as DXT5 Interpolated Alpha and make sure Generate Mipmaps has been selected (Photoshop has another, new way of saving DDS files but I'm not familiar with it). If you want to use a PNG the only things you have to be aware of is that everything around your skirt pattern should be transparent and don't flatten the image before saving or you'll lose all transparency. If you're confused about something I recommend that you export the original EA diffuse in both PNG form and DDS form, open them in Photoshop, and look at how they are structured.

About mipmaps, in case you're wondering. With meshes, you have LODs which stands for Level of Detail. When you're up close to your item the game will display the high poly mesh. Move away from your item and the game switches to a lower poly mesh. Move even farther away and the game switches to an even lower poly mesh. The lower poly meshes look like hell but you're so far away that you don't see how bad they look. Games do this to prevent lag. Well, mipmaps is the exact same concept as LODs. When you move away from your item the game switches to smaller and smaller copies of your texture. Again, to reduce lag. If you're using a DDS then Photoshop will make mipmaps for you (so will GIMP). You just have to make sure the checkbox has been ticked. If you're using a PNG then Studio will make the mipmaps.

You were both correct and helpful! I did use the male mesh, and I did cut the texture too low. Adding about 30 pixels of 'fabric' to the top gives me a skirt that comes up to fill the gap, and since the top overrides it, that gives a smooth effect. I wanted separates that could coordinate for a Regency look, and since I don't know how to 'frankenmesh' the top that has a perfect Regency neck and high bust with the long slim skirt, this was also a work-around to see if I could create a 'dress' effect by pairing them later in-game.

It's a crude thing, but all our efforts are crude when we are first learning, neh? Thank you for your help!