Bear with me trying to explain this! I hope the pictures help to clarify what im driving at.
Here's my loincloth ( front view ). Note that it has a 'lip' that folds forward over the top. Make sense? Also of note is that it doesn't have thickness. How I usually do cloth is not to make a solid mass, but a single sided poly with a 'hem' at the edge that is tucked under to give the impression of thickness. It's easier this way for a bunch of reasons.
Now, heres a view from the back and side, looking at the gap between the front and back pieces. You see my issue?! My head is bleeding trying to figure this one out. Any ideas appreciated:
Much simplified view of my problem. Now, If this model was 'as is' resolution, I could fudge it somehow, but the model is intended for subdivision, and no matter what I try, all hell breaks loose in that top right corner: