I dont use my router as a nameserver....
I use comcast's name servers shown set up like I told you earlier. You can use external name servers with no problem as long as you set your router's IP as your gateway you'll be all set. You still havent said what card you are using.

#1 do this->
ping 127.0.0.1
#2 if it works ->
ping (your router ip)
#3 works ->
ping (your nameserver ip)
#4 works ->
ping http://www.google.com
#5 if that works everything is fine.

if it fails at #1 your machine is just fucked. reinstall.
if #2 fails check these commands to make sure everything is set up correctly
route
ifconfig
if it fails at #3 your routers settings are messed up most likely
if it fails at #4 check this command
cat /etc/resolve.conf
then if you get to #5 all is good.