I think your problems lie outside of DNS, though; I’m past my direct experience here and the GLi team (or someone more-familiar with OpenVPN config) will have to step in here, but to me, it looks like the “updns” command is working OK:
openvpn[2911]: /etc/openvpn/updns tun1 1500 1585 10.8.8.26 255.255.255.0 init
… but the problem appears to be when OpenVPN tries to set up your routing:
openvpn[2911]: /sbin/ip route add 170.178.173.157/32 via 10.0.0.1
openvpn[2911]: ERROR: Linux route add command failed: external program exited with error status: 2
openvpn[2911]: /sbin/ip route add 0.0.0.0/1 via 10.8.8.1
openvpn[2911]: ERROR: Linux route add command failed: external program exited with error status: 2
openvpn[2911]: /sbin/ip route add 128.0.0.0/1 via 10.8.8.1
openvpn[2911]: ERROR: Linux route add command failed: external program exited with error status: 2
Can you remove the “up” and “down” lines from the .ovpn and make sure that works?