Is your use of "STD" for her a Freudian slip? lol

There is a section on this website which is devoted to disengagement.  What that means is you do not get involved with stepkids and try to avoid contact with them as much as possible if it causes you heartbreak.

I know this is difficult when they are younger but it's still something you can do.  In this case, you shouldn't have offered to buy SD a dress.  (SD is for stepdaughter; std is for "sexually transmitted disease" - LOL.  That's why Winterglow joked about it!)  If her father wanted to take her out and buy her one, that's his business but you shouldn't have gotten involved. 

As you have experienced, it is disappointing when you try to do something nice or thoughtful and it's thrown back in your face.  So don't do it!

I had a very similar experience with my SD when she was a teen.  She had a prom coming up and was telling her father and I that she didn't have a dress and was going to borrow one from a friend.  So I suggested my SO  (significant other) and I take her out dress shopping.  I thought it would be a nice experience for the two of them.  I just tagged along and tried to let the two of them "lead the way" during the shopping trip and only commented when I was asked.  SD didn't find anything that worked for her but I got an idea of what she was looking for.  

The next week I was in a high-end department store and found exactly what SD said she wanted!  It was a $900 name brand designer dress in her size and the color she was looking for.  It was also on sale for a remarkable price of $50.  I called my SO and told him about it, and he said go ahead and buy it for her and he'd pay for it. 

When I got home, I texted SD and told her HER FATHER bought a dress for her and sent her a picture.  She came over that day with one of her girlfriends and tried it on.  The two girls were immediately squealing and jumping up and down because it fit her perfectly and was beautiful on her!  She happily left with the dress and my SO and I were glad she had a pretty new dress to wear to the prom.  She knew her father paid for it but she also knew that I was the one who spotted it in the store.  It didn't seem to bother her at all. 

Fast forward a day or two later, after SD got the dress home and BM saw it. (BM sounds like yours - she has absolutely no taste in appropriate clothing and often wears the same dirty clothes for a week at a time.)  Anyway, SD then comes back to our house with the dress and all of a sudden, she is acting all sullen and says she doesn't want it anymore.  She says it was too "elegant" for a prom!  She told us she was going to go ahead and borrow a dress from a friend to wear instead.  

It was all a crock of crap, naturally.  What happened is SD got the dress home, BM got jealous that we were the ones who got it for her, and must have made snotty remarks and convinced SD to return it to us.  SD would certainly not have used the word "elegant" on her own, so that complaint was obviously planted there by BM.

Lesson learned:  I overstepped my bounds by getting involved in the first place.  Even though BM was not into clothes or shopping, she obviously felt that was her role as mother -- and her father and I overstepped.   I never got involved in any further clothes shopping for SD again.  

It would be wise for you to do the same.  IMO, don't get involved in any kind of special event clothes, jewelry, make-up/hair, etc.  That is clearly BM's territory. 

This is one of those instances where one is reminded that no matter how much you polish a turd - it’s still a turd. 

 Did I miss something? So did she like her dress? If she, your SD liked her dress then frankly it doesn’t matter what you thought of it. She doesn’t have to conform to your thoughts on fashion. If she was happy with it then you should be happy for her. 

Making bad grades: embarrassing!!!

not doing her best in school: embarrassing!!!

bad attitude and disrespectful: embarrassing!!!

wearing a dress you don’t like to HER homecoming at HER school (regardless if it’s your old school or not) is her choice. Don’t be that one that person who criticizes a child for being herself. It’s an embarrassment for an adult to act like that towards a child. 

It sounds like you're putting a lot of stock into what your old high school friends think of you. You're all competing with each other to see who has the prettiest well dressed daughter and SD isn't playing.  I think it's awesome that she wore a $10 dress to the dance. This girl isn't swayed by what's in style but rather what she's comfortable in. Move on from the decades old high school drama you're trying to relive through SD.  You had your turn, now it's hers.  

I think it's great that a teen has enough self confidence to dress the way she wants to dress.  As long as the dress was not revealing and the girl actually like it, there shouldn't be a problem. 

If the other girls are making fun of her dress, then your SD is smart to not want to emulate them.

Honestly, based on what you posted, the other girls are the real embarrassments.  They may look right on the outside,  but on the inside they are pretty darn ugly.

Why are you embarrassed by your SD's dress?  Even if it's not what you would have chosen, if she's smiling she's probably OK with it.  I'd be much more concerned if I was the parent of one of the girls who was making fun of her or her dress.  Stop worrying about what other people think - living your life that way will make you miserable.