If your IP & DNS is not set to automatic in your PC's adapter, that would override your router settings. This DNS problem is not connected to the recent KB Update fiasco by MS. It is a different problem caused by MS because they changed WU/MU IP addresses. The DNS is a Lookup table to correlate the URL with their IP address for WU/MU. In other words, your PC is not finding the Update Servers. All DNS/ISP Providers have not yet update the DNS Lookup tables yet.
This is how I understand it! I have never had the problem because I always use OpenDNS.....
You also may need to Flush your DNS Cache on your PC? Do the following in a Command Prompt OR PowerShell Window, same differance:
IPConfig /?
IPConfig /All
IPConfig /FlushDNS
IPConfig /All
(any other command in the "/?" list you wish to explore)
A restart might be required?
You should now see DNS is in the DHCP or automatic mode (ie pointed at your router). If your choose to put the DNS Addresses in your PC (hard coded) then you will see Google's or OpenDNS's DNS IP Address in your "/All".
Hope this helps,
Crysta