If I am understanding you correctly then, you are attempting all of this from being in the DreamHost Control Panel, and then using either the "FTP" or the "WebFTP" option available from the Domains -> Manage Domains section?
There is always a "program" involved, though it is sometimes not "intuitively transparent" if you are not familiar with the technology. I'd like to help but, I'm sorry, your terminology still has me confused as to exactly where you are and what you are doing.
Maybe if you start over and describe what you have done to get where you are it would help me understand what we are talking about when you say:
1) "choosing a directory under the dreamhost site once I am logged in" - I'm trying to figure out what "screen" you are seeing when you "choose a directory", what you mean by "under the dreamhost site", and exactly where or what you are "logged in" to.
2) "under upload files from the ftp site" - did you click the webFTP link in the control panel, or the ftp link, or is all of this happening via an ftp client program (not likely from you description.)
I'm really not trying to be difficult, and I would like to help you, I'm just bewildered by "where you are" in the system, which prevents me from knowing what you are actually seeing and what might be in play with the user/password request(s).
A I said, if you describe, step by step what you have done to get where you are, I can likely hep you.
For example, at this point, if you say something like. "I logged into the DreaHost Control Panel, and clicked on the Domains -> Manage Domain link, then I clicked on the FTP link associated with my domain name, then I .. , etc.
Often, less detail is sufficient, but since there are multiple places that require "logins" and multiple "ftp" tools, and multiple meanings for "choosing a directory" more detail would help a lot. When you say "under upload files", it makes me think you have found your way into webFTP, but I'm still not sure. In short, any additional info you can share would be most helpful.