It has been my experience that a container plant performs better than a balled and burlaped one. Is it possible you could have watered too much? Only you can be the judge of that. To answer your last question I will relate a story that happened to me. My sister had planted some native azaleas that she dug from the wild. All their leaves turned brown so she asked me what to do. I scraped the bark and they weren't green beneath so I recommended she dig them all up and throw them away. She did this with most of them but got busy elsewhere and left a couple. Come spring these remaining plants resprouted from the base. Again it would be your call as to whether these plants have just had their tops die or if they are totally dead.

If it was recently dug from it's former location, many of the roots were severed in the process and it will take some time for it to recover from the shock. A 2" caliper specimen would have had a large, shallow root system, much like a Maple. Dogwoods, however, are a forgiving type of tree. I have one that has been growing in a pot for many years and being in a secluded location, it seems that I always forget about it during long periods without rainfall. The leaves curl, become a crispy brown and fall off. As soon as it rains, it springs back to life.
You may also want to check the rootball to see if the moisture is penetrating it. Depending upon the care the tree received after it was dug, the rootball can become hard and compacted and moisture cannot penetrate into the roots.
As Eddie stated, I prefer those that are pot grown or field grown in grow bags that confines the roots and none are severed when dug.
Best of luck! I believe it will survive.
Rb