Your debug log shows your Pi-hole host machine's network interface to carry two IPs:
*** [ DIAGNOSING ]: Network interfaces and addresses
2: eth0: <BROADCAST,MULTICAST,UP,LOWER_UP> mtu 1500 qdisc mq state UP group default qlen 1000
inet 192.168.1.32/24 brd 192.168.1.255 scope global eth0
valid_lft forever preferred_lft forever
inet 192.168.1.35/24 scope global secondary eth0:1
valid_lft forever preferred_lft forever
While your Pi-hole's DHCP and web servers are listening on all addresses, you have applied a custom configuration that restricts Pi-hole's DNS service to 192.168.1.35 (from your virtual eth0:1 interface):
[misc]
(…)
dnsmasq_lines = [
"# 12-listen-on-virtual-interface.conf",
"listen-address=192.168.1.35",
"bind-dynamic",
(…)
] ### CHANGED, default = []
That custom configuration is potentially interfering with Pi-hole's Interface Settings as exposed via its DNS Settings panel.
By using listen-address to bind to a specific IP address, Pi-hole won't listen on the loopback interface, which may contribute to your observation:
*** [ DIAGNOSING ]: Ports in use
[✓] udp:192.168.1.35:53 is in use by pihole-FTL
udp:0.0.0.0:67 is in use by pihole-FTL
udp:0.0.0.0:123 is in use by pihole-FTL
udp:0.0.0.0:5353 is in use by avahi-daemon
udp:*:123 is in use by pihole-FTL
udp:*:5353 is in use by avahi-daemon
[✓] tcp:0.0.0.0:443 is in use by pihole-FTL
[✓] tcp:192.168.1.35:53 is in use by pihole-FTL
[✓] tcp:0.0.0.0:80 is in use by pihole-FTL
[✓] tcp:[::]:443 is in use by pihole-FTL
[✓] tcp:[::]:80 is in use by pihole-FTL
Furthermore, your debug log shows you have enabled Pi-hole's Conditional Forwarding to 192.168.1.32:
[dns]
(…)
revServers = [
"true,192.168.1.0/24,192.168.1.32,lan"
] ### CHANGED, default = []
But your custom dnsmasq_lines instruct your Pi-hole to NOT listen on that address, i.e. there won't be any answers from 192.168.1.32, unless another DNS server (separate from Pi-hole) would bind that address.
As your Pi-hole is acting as DHCP server, Conditional Forwarding wouldn't be required at all (unless you'd run another DNS server that holds local names in your network).
What's the purpose of that virtual interface configuration anyway?
If you don't depend on it, a simple fix would be to return to Pi-hole's standard listening behaviour, by dropping eth0:1 along with your respective custom dnsmasq_lines.
Probably unrelated to your issue, your debug log shows a few permission issues:
-----tail of FTL.log------
2025-08-07 22:05:07.650 UTC [1314M] WARNING: Failed to change ownership of "/etc/pihole/pihole.toml" to pihole:pihole (995:1001): Insufficient permissions (CAP_CHOWN required)
2025-08-07 22:05:07.677 UTC [1315M] WARNING: Cannot get exclusive lock for /etc/pihole/pihole.toml: Bad file descriptor
*** [ DIAGNOSING ]: Pi-hole log
-rw-r----- 1 nobody nogroup 1.7M Aug 7 22:05 /var/log/pihole/pihole.log
-----head of pihole.log------
(…)
Aug 7 21:17:10 dnsmasq[44975]: warning: failed to change owner of /var/log/pihole/pihole.log: Operation not permitted
It would seem you are running your Pi-hole in a virtualised environment, so you may need to adjust that environment's capabilities/permissions.