Step 3 your file location appears to be the issue. If your FTP domain is setup with the subdomain, you should not need a path point to a folder within that subdomain, otherwise it would be like going to www.yourdomain.com/subdomain/subdomain . So you would end up with a file not found error because the files ended up one level further. Otherwise you can FTP to yourdomain.com with the path of /subdomain.
Alternately, you can change the ftp host to mysite.co.uk
and then set the location to the elephant/ dir
You either use the subdomain in the ftp host OR you set the root dir to elephant/
Either way DW will probably complain that your new site's root dir is contained within another defined site but you can ignore that.
Of course, you could also not define a new site in DW at all and just upload the elephant/ dir from your main site using it's log in. Just as long as the dir and files gets uploaded to the right place it doesn't really matter how they get there. *smile*
Thanks for your replies. I will try when I get home to see if I can get this thing sorted