Looking at the Gargoyle documentation there doesn't seem to be a way to set the DNS server being handed out by the router via the GUI:
Also on their configuration description:
These controls are slightly different depending on whether you have a router running the newer Gargoyle 1.5.X+ series of releases, or the older versions. However, in both cases, Gargoyle will, by default, serve DNS requests from your default ISP DNS servers.
In older Gargoyle releases you can enter the IP addresses of your preferred DNS servers if you do not widh to use ISP servers.
In newer Gargoyle releases, in addition to specifying custom DNS servers individually, you can specify that you want to use either the Google DNS servers, or those provided by OpenDNS.com from a dropdown box. This means that if you wish to use one of these alternate servers you will not need to enter the IP addresses manually. If you use the OpenDNS filtering service you should select the OpenDNS servers from this dropdown, and then configure your account in the Dynamic DNS section so that it gets updated properly. On newer releases that will allow the resolution of specialized top-level domains. While most people will not need this feature, leaving this checked does not inhibit performance, and will permit access to websites you otherwise would not be able to resolve.
I would try to set the "custom" DNS service to your pi-hole and see if that works.
As you stated you added a command to the configuration of it's DNSmasq.conf file but that didn't work and usually that is an issue because when the router reboots it builds the dnsmasq.conf file each time and the setting you added is lost. On their documentation site I didn't see any screens for 'advanced" DHCP configuration which is where it would have been in say dd-wrt and tomato variants of router firmware.
If this doesn't work you will have to go back to the configuration that worked and set the pi-hole address directly. You will only see the router on the list of devices due its being the device that is doing to lookup since your DHCP server in the router is sending out the routers DNS server address.