Hello Hedgie. You've raised some weighty points here, applicable to pretty much all new SL'ers in your situation. Let me respond to them one by one.
From: Hedgie Till
I actually have access to photoshop (I think my husband has it) so that is not so much the issue. I just don't know how to use it yet.
There's no other way to say this than learn, learn, learn. Not only is it essential for Second Life fashion, but knowing how to use Photoshop is a highly marketable skill that can only benefit you in many other areas.
You'll find that Photoshop has more tutorial information available for it than any other program on Earth. Google "Photoshop tutorial" and you'll get well over 24 million returns. Take your pick.
You can also find literally hundreds of books written for learning Photoshop. Head out to any local bookstore or library and you'll find tons. I'd suggest looking for one that's written in plain English, not "computerese". The Visual Quickstart Guide series of books is excellent. I should qualify that statement by saying I haven't actually read the Photoshop one myself, but all the others in that series that I have read have been really good.
Also, there are thousands of training centers across the US and Canada (and presumably the rest of the first world) that teach Photoshop, and pretty much every college has at least one course in it.
It's not necessarily intuitve when you first sit down with it on your own, but it doesn't take long to understand its logic. As soon as you learn a little terminology and experience the basic workflow, it all fits together pretty easily. With a good tutorial to start with , you'll have the basics mastered in no time.
From: Hedgie Till
The money question is that I think...correct me if I'm wrong... you have to pay to get the clothes loaded into your sl inventory if you use an outside program.
It's L$10 for every image you upload. That's the equivlient of about 3-4 cents US at today's mean buying rate. Spend a dollar, and you've got enough for 25-30 uploads. Sell those items for L$1 each, and every ten sales gives you enough to upload something new. Sell them for $L100 each, and every single sale allows for ten new uploads. If your stuff is good, it doesn't take long to be profitable.
I'd suggest grabbing the avatar mannequin models from the downoads section of this site, and then also downloading a free program that can display them, like DAZ Studio or Tattoo. You can test your designs on the mannequins, which will save you the cost of unnecessary trial & error uploads.
You can of course make clothes for free using nothing more than the inworld appearance editor, but they won't look like anything other than painted-on colors with fuzzy, blocky edges. For them to actually look like real clothing takes artistry, and since SL has no painting tools of its own, and outside program is absolutely a necessity.
Also, consider that anyone and everyone can use the same sliders the same way. There are only so many combinations of numbers. No one will buy something that they could make themselves just as well in 2 seconds. People buy textured clothing because it's complicated to make something that actually looks good, and not everyone can do it. There are infinite possiblities there.
From: Hedgie Till
I don't want to have to pay rl $ on that. Yes, I'm cheap but realistic...broke. LOL. I would love to eventually make a bit or rl money from this. At least enough to pay for a paid sl account. right now I only have a free one.
I hate to use cliches, but you have to spend money to make money. There's no way around that.
You don't have to spend RL money though if you don't want to. You could always get a job inworld. Check the Help Wanted forum and the inworld classifieds. There are always people looking to hire others to do this or that. Not all of it might be something you'd really love doing, but hey, that's life (second life is no exception).
If you are willing to spend RL money though, then like I said above, you don't need much to start with. Just a few US dollars is more than enough for a decent amount of startup capital for an SL business.
There are also things you could make that don't require uploads, such as 3D obects and scripts. If you're programming-savvy, there's never any shortage of people looking to buy scripts or to hire people to write them. If you're a decent modeler, you could sell untextured objects (since you can't texture them without uploading images or using someone else's textures). They might not be as fancy as those with custom textures made specifically for the project, but if you've got talent, you can certainly make things that still look great without them (check out Starax Statosky's stuff some time for a great example of exquisite sculptury with no texturing).
From: Hedgie Till
By the way, can I do all this with a free account? I plan on renting space so land ownership isn't an issue. Is there any other reason I would need a paid account if I want to sell things in sl?
The only reason to need a paid account is if you want to own land. The stipend you get is nice, but it's really not necessary if you've got a decent business going. You can certainly make things and sell them with a free account.