I use paint.net, so when I resized my skin, it pixel-lated, and that's a no-no for skins here ;-; Though  it looks ok, I don't think it's up to standard.  I need to know how to smooth out the edges, I tryed opening GIMP and using the blur and smear tools, but it wasnt doing anything. 

Anyone got any ideas how I can resolve the situation? (and don't say buy paintshop pro xD I don't have the money for that ;-; and I don't thik photoplus is the same..).

I know nothing about paint.net, but what did you save the file as? Pretty much it has to be a .png to be accepted here anyway, and .png images don't pixelate when saved. If you still have the large image, also try resizing it in gimp.

I don't know if you can "fix" it in gimp, but why not trying drawing the entire thing in gimp?
I've heard some people like it. (Personally I hated gimp when I tried it. There is a reason it's free; it's crap.)

I've heard a lot of good things about SAI and I think it's about $55? That isn't too much money, try saving up for it or asking for it as a gift if you can.
I've also heard that Photoshop CS2 can be downloaded for free now, so maybe give that a try? I use CS3 and it works fine, so CS2 may not be too outdated and it certainly isn't any worse than gimp. DX

I did save it has png, but I think it went wierd when I re-sized it not saved it. 

I'll look into SAI, I'm not too keen on GIMP either too many windows for my liking, and CS2 was free but I don't think it is anymore.