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Howdy,
The docs here titled "How do I setup nameservers for my domain" should lend a hand with getting your DNS service up and running:
http://www.virtualmin.com/documentation/dns/faq
Error: Failed to create virtual server : The DNS domain my-domain.com is already hosted by your DNS server
The status of your system is being checked to ensure that all enabled features are available, that the mail server is properly configured, and that quotas are active .. Your system has 1010.80 MB of memory, which is at or above the Virtualmin recommended minimum of 256 MB. Virtualmin is configured to setup DNS zones, but this system is not setup to use itself as a DNS server. Either add 127.0.0.1 to the list of DNS servers, or turn off the BIND feature on the module config page.
.. your system is not ready for use by Virtualmin.
Howdy,
Did you by chance try the suggestions provided by that error message? :-)
There's some additional details on that in the article here titled "Received Virtualmin error that 127.0.0.1 isn't listed in /etc/resolv.conf":
http://www.virtualmin.com/documentation/dns/faq