I was wondering how I go about setting up an FTP account for access to a certain subfolder as opposed to a home directory.
You can't. By default, FTP drops you into your home directory. My FTP client, Transmit (for the Mac) lets me set up my default destination directory when I connect.
If you want someone to have access to only a portion of your site, this is the only straightforward way:http://wiki.dreamhost.com/KB_/_Account_Control_Panel_/_Domains_::_Remap_Sub-Dir
Why do you ask?