Blue dresses or blue sashes in traditional songs usually indicated a girl who had slipped off the narrow path.

I can't find my references right now (and damned few they are) except for the notes to Arthur Argo's LP "A Wee Thread O' Blue" (Lyrica Erotica) from 1962 --

"Why the threed is blue I cannot say. The term "true blue" is originally from Scotland, but it derived from the Presbyterian preachers' custom of throwing a blue apron over their tub, and not all Presbyterian preachers were like the clerical visitor to the Ball of Kirriemuir. The Covenanters wore blue as a symbol of rebellion against the Sassenachs, too, but in color symbolism blue stands for chastity, of which there is happily little in these songs. However, prostitutes were called "blue gowns" from the uniform worn by apprehended ladies of the evening in the English House of Correction, and Jung in his Psychology and Alchemy said that blue stood for the vertical, by which we may take it he meant the ithyphallic."

Linn