Hi vintageland,
You have done a good job so far in trying to cover several bases to get your site going in the search engines. Unfortunately, search engines like Google can take months to visit your site sometimes and even longer to list you decently in the rankings. First of all, I would suggest submitting to those sites listed at
http://www.lunarforums.com/forum/viewtopic.php?t=4834, a thread we have on Search Engine Submission. Basically, any and every search engine that you can get listed on will improve your customer base. Also, getting listed at
www.zeal.com (by becoming an editor) will automatically get you included in Looksmart and MSN.
If you do get listed in DMOZ (and they will base this on whether they consider your site to be a quality site), you will eventually be listed on Google. I can attest to this fact. Now that my site is listed in dmoz, I have finally gotten a #1 position, although it isn't for a phrase people are likely to use frequently.
To improve Google's spidering your content and keywords, note that Google reads page content rather than meta tags for spidering. This means that you should have header tags (especially h1, h2) for titles since Google gives them primary importance. Next, Google looks at what you have on the page in <p> tags. So, repeat important keywords in descriptions on your site.
Finally, to improve your rankings, you must have sites linking to you as this is what Google uses to determine your placement. You don't have to get links from competitors, get them from people interested in vintage tee-shirts. There have to be fan sites, blogs, forums, etc. for vintage tee-shirts.
As for AdWords improving your ranking, I don't use AdWords so I can't say. But, I believe Google's faqs note that using AdWords doesn't help you in the Google search engine. They are ads and not considered links, so I doubt they are going to help you. I could be wrong, and welcome anyone using AdWords to assist in explaining this better.
I hope this helps.