Get a refurbished Lenovo thinkpad t470 or so from ebay, make sure it has full HD and comes from a commercial shop. All the Thinkpads work great with Ubuntu. They are good quality business notebooks, easy to repair with good parts availability. You can probably get one around 150 or so.
I repaired laptops for a living for a while and Thinkpads were always my favorite.
Seems weird to me, the router would need to do deep packet inspection of DNS and selectively block specific ones. It feels more like you've set up your DNS to do forwarding instead of resolution. Can you post a network diagram and the DNS config?
If you assume everything is compromised, there is no safety. You have to trust something at some point.
Usually, speaking from a professional IT perspective, people trust encryption. Once you do that, it does not matter how safe or unsafe the place where you store your data is.
AES, the encryption standard used by pretty much everything, is safe. It has not been weakened in any meaningful way since its inception and is also quantum - safe.
You could use for example openssl or Veracrypt or even just 7zip to encrypt it. If you don't trust these tools, encrypt it twice with two different ones, just put a txt file next to it with the exact steps to decrypt, because you will forget in which order you have done things.
Personally I have a homeserver that is encrypted at rest and then it uses restic to store encrypted backups in the cloud.
Nextcloud has collabora integrated.