As far as I can tell, it's not ever updated. In my game, I've added and modified some outfits in Jennifer's wardrobe, but if I import an outfit and select Mom_Wardrobe (which I'm assuming then pulls from the XML file), it just shows the default outfits she started with. I'm pretty sure those XML files are meant to be a hardcoded list of what outfits the character starts with. Hence, if you modify that file from outside the game, it will change what the characters starts with for all your subsequent new games. But again, I haven't tried it myself.
Correct, if you edit any of the default wardrobe files outside of the game, save your changes and place the wardrobe file in the correct folder the game will then use your edited wardrobe file within the game. Obviously you'd need a development version of the game so that you can actually access game files because you'll need to have the default wardrobe files to edit outside of the game. While it can, at first, be a bit of a lengthy, time-consuming process, once you understand how it all works it becomes much easier.
For example, I really didn't like the default outfits worn by students at the University so I edited the University_Wardrobe.xml to contain three outfits I created via the Outfit Manager. Outside the game I took the outfits I'd created and saved to the Exported_Wardrobe.xml and put them into the University_Wardrobe.xml, replacing the default outfits in the file. My edited University_Wardrobe.xml is then used by the game instead of the default University_Wardrobe.xml and all the students at the University now wear one of the three outfits I created.
Obviously if you're already using a development version of the game then you'd be editing and replacing the game files directly. But if you use a standard version of the game where all the individual game files are packed into compressed *.rpa files then you'll simply need to place your edited *_wardrobe.xml file(s) alongside the Exported_Wardrobe.xml inside the "..\game\wardrobes" folder and the game will then use your edited *_wardrobe.xml file(s) instead of the default file(s) packed inside the wardrobes.rpa file.
