I don’t know if this is causing the issue, but it seems like if you put anything on in the Clothing section besides Classic Clothing the avatar gets resetted. The only way to fix from what I know is to remove anything that’s considered 3D clothing.
After a small amount of experimenting, this only happens if you are trying to equip hair. You can equip other items just fine, but if a hair is included nothing will be equipped.
This also occurs to me when trying to equip anything at all.
In fact, that’s how my avatar looks like right now.
I have characters saved without hair, and it still looks the same with different body colors.
It only works when I apply them manually, one by one…