sorry, I'm a little confused here. I did a one click install of Joomla not too long ago. All the information that is needed for thoes files in step one - the mysql informaiton was sent out to your in an E-mail from Dreamhost.
The information it's asking for in step on if the mysql information. you'll need to put in your mysql host - you filled out that info when you used the one click instal. You can't use local host, you'll have to fill out the host name - soemthing like mysql.yourdomain.com, and the user name and password you set up for that database.
Sorry if I'm still off track here, like I said I'm not quite understanding where your problem is.