Ok, first off let's make sure that you've created the MYSQL database properly.
That's at Panel > Goodies > mysql
DB name is simple - anything unique, maybe like domain_pmachine
Next type in a host name, any dubdomain that you have [b[not[/b] used allready.
Then a user name and pass. Please note that these are both CaseSenSitiVe. (if you're allready created a database and are not sure of your password, you can allways click to modify that and change it. You user name is displayed - make sure there's no capitalizations you forgot about)
You can verify that the database is up and functioning properly by going to that host name you created. It will prompt for user/pass and then let you into phpmyadmin. If this works, your datbase is up and function properly and you typed in the user/pass correctly.
Next you have to set up Pmachine to access your database. Not only do you have to provide the correct user name and password, you've got to tell it the hostname of your database. A lot of times, by default a program will try and access :localhost but that's no good here at DH. you'll have to give it that subdomain that you entered when you created the database.
Once this has been accomplished, it should work.
You don't need the IP address of your home computer in there either. (that's under the manage link for your database) you'd set that up if you wanted a program on your computer to be able to directly access the mysql database at DH.
If you don't get it working, let me know and I'll look into my setup of Pmachine here at dreamhost and see if I can find specifically where and how I set up the database.