I recomend using nslookup from the command line to test your dns server. using the ping method above does not tell you if your primary or seccondary DNS server answered the request. You can find pretty good info on nslookup in the online help under command refference. If for example you are using DHCP in your network and you are passing two DNS addresses, and your server in question is the first one, and it is not responding, you would see a delay until your client timed out and and tried the next server it uses. this would explain your lag in performance, but you would still see name resolution with a ping.
hope it helps,
Jay Mosser
jaym@optymgroup.com