It's a living Torah. There is only a commandment for dress when it comes to having a distinctive Jewish dress and we don't have that today. Hassidic dress like Omish and look like Omish and sometimes Orthodox with fake hair sheitels look like stepford wives and non-Jews can't tell them apart. The commandment is "you should be holy" and from there it is interpretation. Theo only sources for clothing are rabbinical and there is no source for arm covering, only a rabbinic source for covering up to one's knees and it does not specify skirts - baggy pants might be acceptable. And the commandment you shouldn't wear a man's clothing does not actually say that - look it up. It says "a man should not wear a WOMAN'S clothing and a WOMAN should not carry a man's tools" (the word used is kli gever). So Don't judge her or think you are more Jewish than her just because you look more orthodox... That's just a category and it does not necessarily mean more observant.