Setting DNS in Router kills the internet

I am using Raspberry Pi Model 3b for pihole with hypriot os and docker. If I set pihole to resolve DNS from my laptop, it works fine. But setting the DNS at the router breaks the internet connectivity.

pihole debug log is attached herewith
https://tricorder.pi-hole.net/yg5smw6zro

Interestingly, after setting DNS in the router, the pihole receives lots of queries to 3.debian.pool.ntp.org.

Can someone help me debug this scenario? I checked with nslookup google.com pihole_ip, and it works when I try from my laptop. But it fails when I try after setting system-wide DNS IP amd without pihole_ip.

Try defaulting your router settings and only enter the Pi-hole IP for DNS on the DHCP service settings page on the router.
Methods 1 or 2 in below FAQ: