Edit the email box from the dreamhost panel. Go here, and click edit on the far right column for the mailbox. You can configure those same options from there. Perhaps you won't have the same difficulty. Make sure to click the "save changes" that is at the end of that top section of the edit that we are dealing with.
I noticed something interesting when I went to look in the panel as I was writing this answer. On the line "Save removed messages" where the folder to archive is specified there is ALSO a check-box at the end of that line, that must be checked to enable. At least on my screen and my browser (FF) the GUI is really NOT clear about that checkbox. Unselected, the folder name is deselected, but the grey tint of the font either selected or deselected just isn't that much different. If that checkbox is unselected, it wont work, it must be checked to archive messages
In my opinion it would be MUCH more clear what's happening if that checkbox were at the beginning just before the words "in a folder name" not hanging out at the end of the line where it's usage is easily overlooked.