Ok so are there other people that can't use NSD because KnownHost insist on rewriting the resolv.conf on system reboot?? This is really frustrating that KnownHost will not allow users to use their own resolv.conf which forces me to use named which requires more system resources.
This is not something that is specific to us - this is something that is done by Virtuozzo - it rewrites network configuration files (including resolv.conf) upon VPS reboot.
If you want to have custom content in the /etc/resolv.conf file you can easily do so by adding something like this into your /etc/rc.local:
But as the node management you can indeed change this behavior (and should). After the initial configuration for a VPS, critical files should never be touched again by the vps software.
To fix this permanently on your nodes, simply edit the /etc/sysconfig/vz-scripts/[id].conf and remove the NAMESERVER line.
Then the resolve.conf won't be touched when a vps reboots.
The reason why this is so important is that BIND cannot be replaced by NSD because you (okay, vz) inject 127.0.0.1 into resolv.conf - on smaller VPS the BIND memory size is too large. At a minimum 127.0.0.1 should be removed.