I've confused update and upgrade check problems. Advice I posted in that message is to problems when SimpleXML is not present or when you don't give internet access to PHP. That problems are upgrade check related and does not solve this particular issue.
I've just re-enabled my Dreamhost account and I'll see what the problem is after the weekend.
I've tested one-click install on Dreamhost and everything is working as expected. My account is on 'good' (that is the server name).
Please contact Dreamhost support and ask is there anything specific with their PHP setup on server you are using that we should know about. Anything different?
For everyone in the same situation...
I have sent a post to DreamHost support (tracking # is 1739407).
I will add another post here when I hear from them.
Ok, follow up on the DreamHost issue... they've got back to me a couple of days ago... they tried something that did not work, but raised a different error. So they are back on it. Still waiting.
We had it installed in a sub-directoy. Wonder where/how is was installed for others and if there is a common link...?