At last have set this up at the place I want, i.e. a subdomain instead of a subfolder. I guess I have to start over again, i.e. upload the theme I want and start hacking inside.
Couple of questions I asked the tech support are answered now. The reason that I didn't see this subdomain appear in the combo selection when I used "1-click installation" was that I have this subdomain "parked" when I first set it up. When it's parked it has at least a page in that folder therefore installation robot didn't consider it an empty domain for installation.
FTP access is now no problem elsewhere except in the office, possibly because of firewall. I'll have to find a workaround.
There is a method in the email from DreamHost about moving from Blogger, I guess I should try that but it doesn't look simple.