。
She was wearing a red swimsuit.
Literal
She [topic-は] red swimsuit [object-を] was-wearing.
水着 (みずぎ) means 'swimsuit' — literally 水 (water) + 着 (wearing). Note that 着る (きる) is used for swimsuits as well as regular upper-body clothing, since swimsuits cover the torso. The ~ていた form captures what she was wearing at that moment.