why can;t I swap clothes during challenges? I see while voting that others can change the dress etc. but I can't. So then it looks layered and stupid. How do you swap out outfits?

Don't click on the item itself, click on the "swap item" button. That will prevent the layering you're experiencing. Also, ensure you are covering the Yo with the item requested on the gem event. If you're trying to cover a pre-loaded dress up with a shirt, it won't work. The default clothing in the gem event will only go away when replaced with a like clothing item (a dress for a dress, shoes for shoes, etc).