Yaron,
That worked! Here are the three scenarios and their outcomes. Feature requests are in BOLD.
Enter credentials of user unknown to SSH service. Error is "Incorrect credentials for <name/IP>." This error should read "Incorrect SSH credentials for <name/IP>."

Enter credentials for user known to SSH service but unknown to DFM. Error is "No credentials were found." This error should read "Incorrect DFM credentials for <name/IP>."

Enter credentials of user known to both SSH and DFM. Message is "Connection succeeded - credentials are valid."

For the benefit of others, my setup is as follows:
Server A:
Windows Server 2008 R2
OnCommand Unified Manager 5.1
Free version of Copssh https://www.itefix.no/i2/content/copssh-free-edition
NOTE: If you setup a domain user in Copssh you don't use the domain in WFA credentials. For example, if you specified DOMAIN\User in Copssh you will type User into WFA credentials area.
Server B:
Windows Server 2008 R2
OnCommand Workflow Automation 2.0
This SSH business is a real pain in the ass for Windows environments, especially since PowerShell is perfectly capable of remote command execution. Either WFA needs to use PowerShell for DFM commands in future version or DFM needs to include an SSH service in future versions!
Thanks again for your help,
Daniel