Yep, my experience in making lots of errors, having people email me questions about their errors, and reading about other people's errors on the Movable Type support forum is that the top two installation mistakes are:
1) Permissions set incorrectly
2) Files transferred in binary mode instead of ASCII text mode
As for 1), make sure you chmod all the CGI files except mt-db-pass.cgi in the MT directory to 755 (user read, write, execute -- group read, execute -- other read, execute). You should chmod mt-db-pass.cgi to 644 (user read, write, -- group read -- other read), because it really isn't a CGI file. It contains your database password.
As for 2), most FTP clients will default to binary mode or to auto mode. In auto mode, they try to guess the type of the file and then switch to the appropriate transfer mode. On Windows, the FTP clients usually make the guess based on the file extension. If the FTP client doesn't recognize the file extension, it goes with the default mode, which is usually binary. Since a lot of the Movable Type files have unusual extensions, your FTP client will probably make a bunch of wrong guesses.
When uploading the Movable Type files to your DreamHost server, you should transfer every file in ASCII text mode except for the gif files in the images directory and in the docs directory.