So since in the subordinate clause, she is wearing the skirt. This makes it the "direct object" which puts it in the akkusitiv case for articles, and the akkusativ form of "der" is "den" This is why the sentence reads as "Der Rock, DEN sie traegt, ist blau. I Hope that that helped. :)
I just finished a set of exercises that dinged me for starting a non restrictive clause [one beginning wit a comma] with "that" instead of "which". Now I am being dinged for using my newly acquired knowledge when translating a clause beginning with a comma with "witch", instead of "that". I can't seem to win. Very discouraging.