Hostname resolution is configured in another file,
probably /etc/resolv.conf. There are probably several lines with
'nameserver IP ADDRESS' where IP ADDRESS is the address of a DNS server.
Hostname resolution order is configured in /etc/host.conf and
/etc/nsswitch.conf
The resolv.conf file contains only the dns servers to query but doesn't
specify the order used by the resolver library.
To answer both questions, above and below: you need to redirect the
request to an http server somewhere that will run squidGuard.cgi to
satisfy the redirect request. That server should be listening on an
interface that other machines on your LAN can reach, because they'll
be sending requests to it when their requests are blocked.
If i remember well is important having the redirect url included in the
allowed url or domain list.
Best Regards
Francesco Ranieri