in the old days the original internet mail concept was that smtp (the outbound server) would accept all mail from any user, but spammers abused that.
Today most all smtp servers require authentication. Including dreamhosts. However, you said you are forwarding your mx records elsewhere, so you will need to check there and find out how to set you outgoing or smtp server settings. I suspect the problem is you have not yet set that part up.
are you able to receive mail correctly? by post #3 here i'm making the assumption that your problem is sending and not receiving.