She is a beauty, but she is not that beauty without makeup.
Did I correctly interpret that the girl is beautiful, but she is less beautiful without her makeup on?
She is a beauty, but she is not that beauty without makeup.
Did I correctly interpret that the girl is beautiful, but she is less beautiful without her makeup on?
This is incorrect because 'beauty' (as you used it correctly the first time) is a noun and not an adjective. You typically do not modify nouns with 'that', only in unusual situations where you are using the noun as an adjective. In this case you need to just use the adjective and say "but she is not that beautiful without makeup". If you wanted a different option, you could say "She is a beauty, but not without makeup" (i.e. "She is a beauty, but she's not a beauty when she's without makeup"), but that would be a more strongly worded sentence. Also, what a rude thing to say. Anyway, your sentence as originally written would only make sense if it was comparing the girl you're talking about to some other beautiful girl (she's not that beauty).
The sentence:
She is a beauty, but she is not that beauty without makeup.
is at least awkward, if not incorrect as written. "that beauty ought to mean another specific person who is a beauty, but no such person is mentioned.
The original could be rewritten in any of several ways. I would suggest:
She is a beauty, but she is not that much of a beauty without makeup.
This makes minimal changes to the original, and expresses in a clearer way what I understand the original meaning to have been.
By the way, what is the source of the original quote? Did you write it yourself? If not, where did you read or hear it, please? In general one should provide a source, preferably an author and title if available, along with a link when possible, when quoting an example here on ELL.SE. This allows a reader to find additional context, whch often helps, and gives proper credit to the author.