1) Autosmooth OFF
Before importing any meshes, make sure that 'autosmooth' is unchecked on the groups page
2) Set the Joint Size small
If you have blue lines all over your screen, those blue lines are the joints. For some reason the default size is huge! Go to the "File" menu, pick "Preferences"..............In "Preferences" click the "Misc" tab. Where it says "Joint Size" change the value to .01
Now they should be very small blue circles.
You can go to the upper right area and click on the "Joints" tab, then uncheck "show skeleton" and the blue joints will disappear making it easier to work with the mesh. Hiding the skeleton will also protect it, and prevent you from accidently moving a part of it and breaking your mesh.
3) Adding Points and UV Mapping
If you wish to add more vertices to your mesh (so that you can, for instance, stretch a skirt down longer, and have more joints) there are commands in milkshape that are good for this, and some that are not. Some will not actually add the new vertices to your UV Map. Note you can only add new vertices in conjunction with Wes' plugins, not with a Meshtool OBJ file.
To add new points, select the face(s) you wish to add vertices to, and use the 'subdivide 4' or 'subdivide 3' commands. They will automatically be added to the UV Map, although you will still need to make bone assignments to the new vertices. Avoid 'subdivide 2', as that command does not UV Map the newly created vertices.
To learn how to adjust the uv mapping after you've reworked your mesh, see this tutorial: http://www.modthesims2.com/showthread.php?p=1083566