Glad you got it working!
I think your problem was that you had already added the sub-domain as fully hosted sub-domain.
At that point you can 'remove hosting' on the sub-domain from the manage domains tab of the panel.
Or you can just delete the sub-domain and add it back as DNS only.
and remember, DNS propagation can take time, it's not always instant unless you have your workstation/laptop etc's DNS servers set to dreamhost, and even then remember the rest of the world may still take time to propagate before they can see the site.