I'm working on the morph groups for a new nude top, and the default nude bottom has a terrible "dent" in it. I keep a copy of this particular Maxis default for future projects, waist seam and normal alignment, etc. I've smoothed the area below the waist seam to some degree, but it still looks pretty ugly at the waist. Is there anything else I can do to make it look better, or is the waist made that way intentionally because of the way the Sim walks while pregnant? With the modified walk, Will the changes I made to the bottom still look OK, or should I just leave it alone all together?

I don't think the walk has anything to do with it; I think the dent is simply EA carelessness. The nude pregnant morph was never meant to be seen and putting it in the game files at all may have been an oversight. It's kind of a shame that it was since otherwise modders might have adopted a different standard.

Your choices are to smooth it as much as possible while keeping the waist seam unchanged, or use a non-standard waist seam which won't match other modders' work.