I use acrylic dns proxy too. The problem is that you need an active network interface for DNS queries to work. With loopback interface only (localhost) acrylic dns queries won't work.
I think that windows checks for active network interfaces: if no interface is found, all DNS queries will fail even without trying. In my case, it's enough to plug an ethernet cable and thus activate the ethernet interface, no matter if there is an internet connection.
So, even if you're not connected to internet, try to enable wifi or another network interface and setting a valid IP on it.
Be sure that the interface has DNS configured to 127.0.0.1 and has a valid ip, for acrylic dns proxy to work.
If you don't have any valid network interface, you could try to install a virtual interface, but I haven't tested this solution.