For his next adventure, Butler reached back to another track he'd recorded prior to his tenure in Tin Huey. In 1977, Butler had written and played all the instruments on "I Know What Boys Like" and had his friend Patty Donahue sing the deadpan sarcastic lyrics, crediting the result to the non-existent group the Waitresses. Settled in New York after the Tin Huey debacle, Butler gave his almost-forgotten song to club DJ/producer Mark Kamins, who got the "band" signed to the new wave imprint ZE Records. According to legend, Butler wired his last 50 dollars to Donohue to take a Greyhound bus to New York, while he formed his imaginary band out of various unemployed New York musicians, including ex-Television drummer Billy Ficca and free jazz saxophonist Mars Williams, who had been working as Anthony Braxton's copyist. The newly constituted Waitresses recorded a hit album, 1982's Wasn't Tomorrow Wonderful?, and a follow-up EP, I Could Rule the World If I Could Only Get the Parts, named after one of Butler's Tin Huey songs. Both records sold well, and critical acclaim for Butler's smart and funny lyrics and Donahue's inimitable vocal style -- she sang like she was chewing gum, talking on the phone and painting her toenails at the same time -- was widespread. However, after a fractious tour, the Waitresses split up during the sessions for their second album, 1983's Bruiseology, leaving Butler to piece together a brief album using an instrumental and a track sung by bassist Tracy Wormworth as filler. An unsuccessful attempt to restart the band with former Holly and the Italians leader Holly Beth Vincent as the new lead singer was a non-starter, and Butler abandoned the Waitresses concept for good late in 1983.

After several years producing albums for other artists, including the dB's, Scruffy the Cat, Freedy Johnston, and Joan Osborne, as well as working as musical director for several cable TV shows, Butler returned to solo recording in the mid-'90s. In 1994 and 1995, Butler released volumes one and three of a projected four-part series, The Wilderness Years, dedicated to recordings made on obsolete media; volume one was recorded on an Edison cylinder, while volume three was made on a 1940s vintage wire recorder.

Butler's next project was even more ambitious. Basically for a joke, Butler wrote and recorded a 69-minute song, "The Devil Glitch," which had no repeating verses and no instrumental breaks. Butler recorded the entire song live in one take, accompanying himself on acoustic guitar, and broke the song into three-to-five-minute chunks that he distributed to various musician friends to add their backing to. Reassembling the whole thing over the course of a year and a half, Butler released the results, along with a five-minute radio edit, on his own Future Fossil label. The 1998 edition of the Guinness Book of World Records listed "The Devil Glitch" as the World's Longest Pop Song.

In 1999, Tin Huey briefly re-formed and released a new album, Disinformation. Butler's next solo project was the comparatively straightforward I Feel a Bit Normal Today, a 2000 release of songs written and recorded over the previous seven years.