Whatever Kate's outfit is supposed to be, someone made a huge mistake!
As to Nicole & Kristen. We really have not heard/seen on the show exactly what went on, but all those who were "rescued" from the Nashville explosion/fire were kept elsewhere, maybe under some sedation. Jack was "sold" to Eve, delivered by Xander; Tony was still recuperating, but allowed to eventually have his own apt., to which Kristen had a key, so was in contact. Xander was employed by Kristen, so was free to roam around, as long as he followed her orders. And since Holly was in Salem, maybe Kristen told Nicole if she lay low, did not cause a problem, she will arrange for her to have Holly. However, knowing Kristen, she probably said she would kill Holly if Nicole failed to keep her word. ??? I doubt if Nicole is under lock & key with Holly, but that is possible, too.