Local dig works, but dig with external ip it doesn't

[deHakkelaar]

Check if interface configured for Pi-hole is the same as the one holding IP 192.168.0.170:

grep PIHOLE_INTERFACE /etc/pihole/setupVars.conf

ip a

Could be rebind protection:

Why won't Pi-hole work with DNS rebind protection enabled?

What is DNS rebind protection? If your router has an option called DNS rebind protection enabled, you may run into issues when trying to use Pi-hole as your DNS server. The reasons for this are quite technical, but to summarize what this option does in one sentence: DNS rebind protection does not allow DNS queries to be answered with a local IP address. Why does this interfere with Pi-hole? DNS rebind is meant to be a countermeasure to an attack on your network. So in many cases, it's actu…

If suspect rebind protection and cant find any settings related in the router settings, you could connect a PC/laptop configured with static IP directly to the Pi-hole box (no router/switch inbetween) to see if replies to dig/nslook/host etc.