@lizzi555: As stated in the post, I have the options disabled for a long time. I only enable it when someone is torrenting like crazy, causing sluggish performance, since it's impossible to block torrent traffic any other way.
@mackworth: Although DNS relay is an option, a lot of people are not about to disable it. Disabling DNS Relay, defeats the purpose of an easy network "set and forget". It is not an acceptable solution to have to configure every device for a static DNS server, which in my case involves 6 laptops now, 2 Desktops, Xbox 360 and a PS3.
I don't think that disabling the function would solve the issue. I can see that it could be a work-around if the router was dropping only DNS traffic, but that's not the case here in my scenerio.