To be honest.. Even if we're not supposed to do it, as long as we don't abuse resources and want to have a small page for a friend or family, LP will generally look the other way.. Take that as you will I guess.
Subdomains are not really seperate entities by definition in the first place though. As most sbdomains usually carry the address of sub.domain.com
Sub domains and add-on domains all have a sub-folder inside the public_html folder, thats just how things are setup.
I'm not sure why DW is giving you problems.
Have you tried using ftp.yourdomain.com, instead of the server address ?
Also, have you made sure to input the username properly ? (
user@domain.com, or maybe
user@sub.domain.com)
Also, do you have the FTP account pointing correctly to the subdomain folder ? If so, and you have a path listed in DW, this might be interfering.
Thats all I can think of right now. If you can provide any other details I might be able to help a little more