If I'm reading this correctly, your domain is registered elsewhere, but you have the dreamhost nameservers set up as your name servers. Thus you can't use ther other location for your mail forwarding.
This is how I'm setup, and I have no problems with mail forwarding. How does your new address show in the panel? Does it show as a forward only email address, or as a regular address that also forwards? In my experience, the forward address take effect pretty much immediately. The regular email accounts do take quite a while. Is there a little clock symbol next to the email address on the panel? If so, it is still being set-up.
Now, you said you are getting an Undelivered mail returned. Is that mail for the fowarding address, or for the final destination address? What are the details of that email? There is usually a reason specified in those failure emails.
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