NerdIT :
I would use googles DNS (8.8.8.8 and 8.8.4.4)..because your router seems to be having issues with it's DHCP server (the function that hands out IP addresses to your devices) at least with your PC, so there's no reason not to think other services -such as DNS- may be wonky. So, I would try googles DNS for now to rule that out.
There is no rel problem with leaving it manually/statically set. If DHCP is working on other devices, which it seems like, and you happen to pick an IP address already assigned to another device. DHCP will reassign said device a new IP address pending a reboot/re-connection (probably without the need to do so)
@ Warp 9 - Lets say machine A is statically assigned but it is off. When machine B is turned on and pulls the same dynamic ip address as statically assigned machine A, machine B will turn on and there will be an ip conflicted, unless there's a reservation or an exclusion configured in DHCP. Also if this is a laptop, and the user tries to plug into a different network, connectivity will be limited.
@ Luke_2707 -
You could try this:
http://helpdeskgeek.com/windows-7/fix-unidentified-network-and-no-network-access-in-windows-7/
You could also set your TCP/IP stack back to Automatically assigned and take your computer/laptop to another residence to see if it can obtain an internet connection. When you do an ip config /all, your wired connection shouldn't have a 169 address (you'll know it's working properly). If it doesn't there's something wrong with the software/drivers or hardware of your network interface card.
At that point i'd suggest reinstalling your network drivers/software.
Then if that doesn't work a winsock reset:
http://iihelp.iinet.net.au/Resetting_Network_Adapter_(Winsock_Reset)
If all of these solutions fail, you need to purchase an Ethernet adapter for your wired connection.