Hmmm…Free and good…Blender takes it all. I’m not sure what your problem with modelling hair with it is though. You would model it just like you would in any other modeller. The whole hair/particle simulation thing wouldn’t transfer over anyway unless it was converted to regular geometry, at which it would be very inefficient. It is the same as with other software. Many of those little things just won’t get exported anyway. I could be wrong, but the way you mention the hair seems like you expect to use the unwieldy simulator for it, so I clarify. And if that is not the case, what exactly is wrong with modelling HAIR in Blender?
Makehuman, if you don’t mind lots of geometry, is pretty nice. Although you are still going to need something to go with it, mainly for animation. Blender works for this as well.
I understand some people don’t like Blender, but it is usually because of the GUI or similar issues, or heck, even the learning curve, but not because it is not capable of modelling something, as I don’t really know exactly what it can’t model.
Tools…Blender, the Substance suite(LIVE subscription is only $20 a month, and it is more like rent-to-own), Gametextures.com, and Turbosquid.com. I generally don’t like pre-canned models too much, but it is actually a thing with me that I can take something already done and adapt it to my needs quicker than what it takes to make it myself. The same goes with textures, especially when combined with Substance Painter. I sometimes use the GameTextures.com materials directly painted onto my models, and sometimes I use parts of them, change them up, combine them in different ways, and get acceptable results. I’m no artist(despite having a good grasp of 3d concepts, etc…), so I do what I can to get acceptable results.
LMMS is great for music, but often you can find something from either the asset store or a donation/free with credit music website like Incompetech to get your game’s music going. The same things apply to sound effects. Many times with sound effects things don’t fit perfectly but with a few changes suddenly it works.
One good thing about doing this for a hobby, or if you consider yourself “indie” is that you don’t have to do things perfectly, rather, acceptable. More important is that the game’s style fits together than that things be perfect. It is better to have graphics be the same style and ugly than to have nice graphics that don’t fit together. In my current project, despite them being ugly, all my alien enemies have certain things similar to each other, so they look like they could be the same “species.” All of the player’s stuff also have a similar look to them(or will when I’m done). Though I’m using pre-canned music, it is either going to all be a rock-techno style, or if I can find enough that fits, a sci-fi space style. I don’t intend on mixing the two styles though, but either one can actually fit the game as it is space based, and action based, but it works best if it is all the same style.