Is it normal that i tell my friend she looks cute, but she really doesn't?

Unless you wish to lose a friend and look like an asshole then I would just keep that to yourself.

I don't know your gender, but you are experiencing what many women experience around their friends. Chances are, she knows that she is not entirely good looking and she is using you guys to enforce that she is. That is probably why she wears the tight clothing. There is a chance that she is compensating for her looks by exuding said confidence. Sounds more like she is reminding herself that she is attractive rather than you guys.

Either that or she has a totally off image of herself but, like I said, unless you want to be THAT asshole, I'd suggest just looking the other way. It's not a big deal, women have to do it all of the time for the sake of peace... "peace".

I would just keep telling her what she wants to hear honestly.

Because think about, if you tell her she doesn't look good, it could lead to hurt feelings, witch could lead to arguments, which could lead to lost friendships.

Does it really bother you that much to make your friend feel good for a few seconds a day? I hope not.

Yes, very normal. Almost everyone has told a white lie to spare a friend's feelings. Let her have this small victory for herself and don't spoil it for her. More than likely, she's been told that she's not good-looking, and is wearing these clothes to feel better about herself. If she is very young, it is probably a phase that she'll grow out of eventually.

but you need to be honest otherwise she will hate you when someone does eventually say to her you look yucky or something way more harsh

If she's being annoying about her supposedly good looks and going on about it all the time, I'd tell her just to make her stop!
(i have a friend who's rather ugly but she's mean and makes fun of ugly people... Makes me wanna tell her to go get a mirror!)

If she's nice and you know she's insecure and you don't mind making her feel better, keep lying and maybe throw hints about better looking styles for her :)

by telling the truth, you will lose a friend and your -honest- opinion will not stop her from wearing the same tacky clothes... so let it be

She might have her own problems... Just keep doing what your doing. When she finally has someone else tell her, tell her that she isn't as good looking as she thinks she is but she still looks good. That way she might get down to earth...