No one is going to see this but I'm throwing this question out there anyway. I figured out how to convert TS3 Clothing to TSM with shoes attached and I can get the neck lined up with the head, as well. In short, I imported a TS3 .simgeom into Blender using the GEOM addon by Smugtomato found here on MTS (I love this addon!!!) and imported the TSM AF body .simgeom, as well. Then I deleted the neck and part of the upper chest and back in the TS3 mesh and replaced it with the same parts from the TSM body, then merged the vertices of the TSM neck and the TS3 mesh. I also welded vertices in the UV editor, where necessary. The dress I've been working on is the TS3 store's 3 Tiers wedding dress. It's split into two groups as no group can have more than 60 bones assigned and this dress has more than that. In this case, there's the main dress in one group and the left thumb in the other. Okay, so the main dress that I edited became my group 0 and I combined the thumb with a pair of shoes and that became my group 1. I was careful not to touch the seams; I'd merged seams and then split them once and it messed up the UV layout. So, that's a no-no. I used the limit number of weights per vertex function (not needed in this case) and used the addon's recalculated IDs function before exporting each group. Used Milkshape to convert the .simgeoms to WSO files then imported the meshes into TSRW. I should mention that I cloned the af body ep7 vampire wrap dress as it has two groups in each LOD. I combined the textures (multiplier, specular, bump map, and mask) and imported them. Exported the package file from TSRW and edited the CASP resource so that I could get it into TSM. Everything worked well...except for the cursed seams. I can't use Mesh Toolkit to fix the seams since my mesh's vertices aren't in the default TS3 position. I could try using Milkshape to fix the seams but I'd rather gouge out my eyeballs with a fork. I'm hoping someone has some info or even something to try. A wild guess. Anything. I thought about keeping the original neck and just reshaping it but then I'd run into the same problem with Mesh Toolkit and again, Milkshape is extremely frustrating to use. I thought about not touching the neck at all and instead adding some sort of collar or choker to hide the neck. I don't know. Seems I'm the only one actively trying to convert clothing but this is beyond me at the moment. I could really use some help.

I should add for those interested that making the clothing specular fully black fixes the shininess in the game. In the case of the 3 Tiers dress I kept the shine on the overlay (the lace and seed pearls) and made the rest black.

Edited to add that I know what the problem is. The normals along the edges are going in almost opposite directions. I don't know how to fix it, however. There's the Normal Edit modifier in Blender so maybe that's the answer?

I'm glad to hear you figured out a solution to the neck and shoes thing. Good luck with fixing the second group! (Sorry I can't be more helpful than encouragement, but I've never touched a model in my life, heh).

So, I'm not talking to myself after all. Awesome! LOL. I actually did get the problem figured out. It was because I had the auto smooth box checked in Milkshape. Durrr. Took me hours to solve that problem. Auto smooth is great in Blender 2.80 but terrible in Milkshape. It's terrible in older versions of Blender, as well.

Now, I just need to learn how to make the morphs.