In my experience, ne pas payer de mine is used either when you know that the inner quality of something is better than it looks,

Cette petite brasserie ne paye pas de mine, mais on y mange très bien.

or when you’re put off by its aspect and waiting to see if it’s better than it looks.

Ce magasin ne paye pas de mine ! [mais j’attends d’être dedans pour voir]

The expression is mostly used to describe things, and when applied to people, it is always neutral or practical/professional-oriented. I’ve never heard it used to describe someone’s lack of physical attractiveness or sex appeal.