I am having the exact same problem - every merperson I've met underwater swims like a merperson but has normal, human, unscaly legs. The mermaids are wearing seashell tops but swim bottoms or shorts instead of mertail.
Using the resetSim cheat didn't work for me.
For the one merman I haven't met underwater yet, I was able to use Vaygirl's method of clicking into changing his scale color, and then finding "special outfit 1", both through NRaas' Master Controller mod. I have no idea if this worked because I haven't run into him underwater since trying that.
However, the other four that I've met in-game while underwater show up in CAS with bare human legs, so the color palette doesn't come up and I can't use that method to regain their "special outfit 1".
I wanted to try the cheat of changing their age like Summerskydreamer suggested, but I didn't know how to do exactly what she said. I did figure out how to use Master Controller to change one mermaid's age, but her legs remained scale-free when her age changed, plus she lost some traits when I made her younger! So I gave up on that approach.
However, I found this suggestion on a different site and tried it: http://www.carls-sims-3-guide.com/forum/index.php?topic=18338.0
I needed to have both NRaas' Master Controller *and* Master Controller Cheats downloads. Once those were in my game, I went in and, with each of the four merfolk I'd met underwater, I removed and then re-added their mermaid occult status. I haven't met any of them again since doing this, but I did check one of them by going into "change scale color", and where she had bare human legs before, she had mermaid scales after doing this cheat! Not only that, but after using this fix, I ran into a couple different merfolk out in the water that I hadn't met before, and they have tails like they're supposed to. So the fix looks promising. The only downside is that when you re-add mermaid status, apparently the tail of the merperson you're doing gets recolored to dark blue. Which means you'll have to either try to recreate their original look using "change scale color", give them a new look all your own, or just accept their royal blueness.
I am glad it looks like my merfolk have fishtails again, but I must say I continue to be disappointed that we Sims users have to become tribal technicians just to deal with bugs that EA should 1) never have allowed in released products, 2) have patched by now, and 3) be able to offer reasonable and effective support for.
Anyway, for whomever wants to give it a try, here's how you do it:
First, download and install both of these NRaas programs: Master Controller, Master Controller Cheats
Once properly installed, run your game as usual.
Once in your game, go to "map view" and click on "City Hall". There should be an NRaas option, click on that.
Now you have to click through a series of lists. Here's what you pick from each one, in order of appearance (note: at some point about halfway through, just clicking on the category doesn't take you to the next step, you have to select your category and then click on the bottom right check mark):
"Sim"
"Intermediate".
"Occult: Remove" (This option is only available with MasterController Cheats mod)
"Occult Type"
"Mermaid"
-At this point you should see a list of all merfolk in the game (my relatively new game shows 12 merfolk total).
Select your merperson.
Now there's a list of all the ways to be occult. All should say "false" except, of course, mermaid which will say "true".
Highlight "mermaid", click the check mark.
Done! Your merperson is now a boring human. MAKE SURE you remember your ex-merperson's name, because you'll need it to make them a merperson again!
Repeat all the same steps, except now in "Intermediate" you will choose "Occult: Add".
Next, you can find your ex-Merperson by either selecting "Occult Type" and then "Human", or selecting "Gender: Male" or "Gender: Female", whichever's appropriate :) Find your Merperson by alphabetical order, last name first, and select him/her.
Now you'll get a crazy long list of all the ways of being non-exactly-human in the game. Seriously, "meteor"?!? Hmm, I wonder... Anyway. Find "mermaid" (which now says false next to it), and select that. Click the check mark, and voila! Your ex-merperson is now a merperson again.
You can always double-check your work by going into the City Hall - NRAAS menu again, selecting Sim, then Basic, and then try out Change Scale Color. Select the merperson you just Urusla'd, and see if his/her legs have now changed from glitchy human blandness to scaly, mervalous beauty. Yes? Success! Might as well recolor them while you're there. Or not.
Good luck!!
Update: Every mermaid/man I've run into underwater since using this fix has a tail. I used the fix with the four merfolk I'd run into underwater before, who were missing their tails and any scales on their legs. I have seen two of them in-game since fixing, and they both have their tails back. I also finally have seen a merperson on land, with scaly legs. And all the new merfolk I've met have their tails too. So this fix has worked 100% for me.