Soo, it's an old thread but I thought it might be worth a shot...
My father in-law is experiencing the exact same issue with the same model router as described here with DNS working only occasionally and even after changing the DNS servers in the router itself (which by the way is soo sluggish it takes minutes to load each page), it still doesn't work more than occasionally.
Setting DNS directly in each computer works great except I won't be here to help him with that so any advice would be greatly appreciated.
Apart from the router being sluggish in its gui and the dns being slow to non existent, everything else seems fine and once the dns is changed in the computers, traffic flows just fine.
Router reboot didn't help but I haven't done a reset yet.
Thanks
Andreas