!** WARNING insecure **!
Do NOT run the DNS server in "y" mode unless it is already behind another firewall and the outside network is already secure to some extent. Normally you should ONLY run the DNS server in either "s" or "e" mode.
But as Dingetje stated you should never get any error messages and the current output of your password means there is something terribly wrong in the configuration which MUST be fixed or nothing is going to work right.
If this is a machine that you plan on tinkering with I strongly recommend installing the "mc" package to assist with editing files and such versus just using the built in editor.
If you are afraid that you might make a mistake. The chances are high that you will never learn anything.