"I do not bike wearing that."
Translation:Daarin fiets ik niet.
As a native speaker i can say that both would be usable but 'daarmee' could be anything depending on what the speaker is refering to. For example it could also mean that you are not going to ride on that bike (because it is in bad shape/taste). 'Daarin' would technically be beter because it is almost certain that you are refering to clothes while saying that. Personally I would prefer 'daarin ga ik niet fietsen'. Hope this clearifies it.
Okay, so I'm a learner not a speaker, but I believe since it says 'wearing' that, it is daarin, not daarmee. If the sentence was "I do not bike with that (bike)," then it would be daarmee fiets ik niet. Just like we will say we are going to work IN jeans today, this person will not bike IN that.