The server is doing something odd with MyDNS and I can't determine what it is. I'm using a recursive resolver set up in my /etc/mydns.conf rather than adding more software (DNSMasq) to the system because I have a full resolving bind9 setup running on another machine for my customers.
Like you, at some time interval that I haven't yet determined MyDNS stops using the resolver and will not resolve external domains. A simple /etc/init.d/mydns stop; /etc/init.d/mydns start solves the problem ... for a while. I still haven't figured out WHAT is causing it to stop resolving. I'll probably have to write a script that does lookups every few minutes and logs the time to see when it fails, I can't sit and watch the machine.