The 7z includes a how to guide complete with pictures (MS Word .docx format), and a demo model to follow along with in MS3D. This is one of those things that's easy to do, but figuring out how to do it takes a while. The only tutorials I could find showed me how to fix them for boxes and columns. Hopefully someone will get some use out of this.

Edit: A few posts down Bloom describes a better way to fix your normals than the way I put into this guide. If you understand what he's suggested, definitely adjust your normals that way. If you're really new to meshing and have trouble following along with some of the tutorials that assume you know things you really don't, this guide will at least let you get rid of those ugly shadows that appear.

The easiest way is to simply weld the whole mesh together and put autosmooth on.
select the vertice(or the whole row) were you want sharp edges between the planes and choose unweld, autosmooth will autocreate.
When done turn autosmooth off and use model cleaner to divide the seams for the parts that were already divided by the uvmap.
You best do this before creating the morphs.

Edit,
Forgot to say, this does mean you need to fix neck, waist and ankles with a reference mesh later on as autosmooth kills those specific normals.

Wow, that really does sound a LOT easier than all the stuff I go through. If nothing else comes out of the time I spent on this, at least I know an easier way to do it now! Hmm, how do you get the normals from a reference mesh for the waist? I think that's the problem I'm having with a couple of my meshes that I can't seem to figure out.

Do you have Wes his merge tools, those are a must have.
Wrote a tut bout them here, mostly bout the data merge but the normal merge works the same
http://www.modthesims.info/showthread.php?t=398865

I use them all the time -- it's how I aligned the waist and neck vertices until I found out Toolkit does it automatically. I didn't really understand how to use the Normal tool properly until just now. Every time I used it the normals would change dramatically -- I must have been doing something wrong. I had such an awful time getting the normals aligned that I experimented with regrouping until I finally came up with a way that worked for me. It's time to back up and learn how to use it the right way, now that I have a little better understanding of what's going on. Thanks for the tips