This project shouldn't take a learned seamstress very long at all, but if you're a beginner like me it might take you longer.
Because I also took pictures and planned my tutorial while working on it (and I'm slow), it took me 8 hours 20 minutes...
Get a button-down shirt that is large enough to encircle your under-bust where that red line is.
(unless you want it shorter and cut it down farther).
Cut off the sleeves at the seam.
(Save for a later step!)
Now cut off the collar (front and back) a little above the first button.
Next turn the main piece inside out and try it on.
You will want to pin the sleeve holes so that it fits your hips and isn't lumpy, then sew a straight stitch!
(mostly just fit it to your body and sew it up)
Turn inside out and this is what it should look like!
Take each of your sleeves and cut off the cuff and at the bottom seam ( black line)
Use the sleeves and your lining fabric to make the top.
Tutorial for top: http://forum.threadbanger.com/showthread.php?t=11888
Then sew it on to the bottom of the dress. I suggest also topstitching over the bottom part because of the fabric.
Wait for a sunny day or vacation and wear it!