Above output looks good except for the "lease-time: Infinite" part.
That was most certainly not the default setting on your router or was it?
Does below one reply when run on a client (Windows/MacOS/Linux) in a CMD/terminal prompt (not via SSH to the Pi-hole host):
nslookup pi.hole 192.168.1.160
If not, there could be several reasons:
Check your router settings for below:
Or any other settings on the router that can interfere with DNS.
If there are any firewalls active on the Pi-hole host or in your network, they should allow below ports (not for the WAN port on your router!):
Some antivirus software can interfere with DNS on the client.
I believe AVG is one of them.
Do you have another device to test, a phone/pad etc?
Make sure that client renews its DHCP lease by dis and reconnecting it from/to network!
If you browse to below URL on phone or pad, it should show you the Pi-hole webGUI:
And you should see queries on the dashboard/logs etc.