I did check to see that cookies are allowed ... but your suggestion prompted me to give a different browser a whirl. Result: works fine with Firefox. So at least I know it's something squirrely with IE, not DreamHost, so you've saved me a ton of time and frustration. Thanks.
First thing I'm going to look at is this Google toolbar I have installed on IE ... seems to me that months ago I had to override its popup blocker function in order to get webmail to work, so perhaps that needs to be reset.
Cheers and thanks again,