Docker DNS problems behind a proxy

I'm fairly new to Docker so bear with me for a minute :-)

I'm trying to run a container under Docker Desktop on one on my Windows 2019 servers that operates behind a proxy. The Docker Version is 20.10.8. I have configured the proxy server + credentials under Settings->Resources->Proxies and specified the DNS under Settings->Resources->Network, pointing to the main DNS server my Windows server uses. Whenever I try to pull or run an container, I get the following error:

Using default tag: latest Error response from daemon: Get "https://registry-1.docker.io/v2/": proxyconnect tcp: dial tcp: lookup http on 192.168.178.5:53: read udp 192.168.178.4:64413->192.168.178.5:53: i/o timeout

This seems to be a DNS error, but I can't figure out whats actually wrong here. The IPs mentioned are coming from the configured docker subnet, but I don't get why, because so far,there a no containers running on the server as I have not been able to pull an image.

When I call https://registry-1.docker.io using Chrome, I get

{"errors":[{"code":"UNAUTHORIZED","message":"authentication required","detail":null}]},

so the address it at least reachable.

Something seems really iffy here, and I don't know where to look. Am I missing something how DNS works in this scenario ?

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