In reply to:
Anyone know what I'm doing wrong?
I am not exactly sure how you have things configured.
Generally, if you have the domains registered elsewhere, but hosted at DreamHost, you would simply set the name servers at your registrar to ns1.dreamhost.com etc. then add the domains to the DreamHost hosting system at Domains -> Manage Domains -> Add New Domain / Sub-Domain.
If you have the parent domains configured like this, adding a sub-domain should be a simple matter of adding it via the DreamHost panel (also using Add New Domain / Sub-Domain), you do not need to configure anything at your registrar for the sub-domain, since the DreamHost name servers are handling DNS for the parent domain.
Remember, after changing the name servers, it can take a while (up to 72 hours) for the new DNS info to propagate across the Internet.
Mark
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