DNS needed for Subdomain

I have a primary domain(s) at Squarespace, IE: example.com.  This domain is used primarily for email.

We have Windows AD subdomain, fu.example.com and a host called (AD), ad.fu.example.com  The subdomain is hosted internally on our windows servers / active directory.

I am trying to get Let's Encrypt to issue certificate for AD, which is an Active Directory server / Ldap.  For now I am trying to get this working manually, once I get it tested I can move forward with automation.

win-acme output 

 [DBUG] Querying name servers for example.com
 [VERB] Found nsRecords: ["dns1.p03.nsone.net.", "dns2.p03.nsone.net.", "dns3.p03.nsone.net.", "dns4.p03.nsone.net.", "ns01.squarespacedns.com.", "ns02.squarespacedns.com.", "ns03.squarespacedns.com.", "ns04.squarespacedns.com."]
 [VERB] Querying IP for name server dns1.p03.nsone.net.
 [VERB] Name server IP 198.51.44.3 identified
 [VERB] Querying IP for name server dns2.p03.nsone.net.
 [VERB] Name server IP 45.54.22.193 identified
 [VERB] Error from 198.51.44.3: Non-Existent Domain
 DBUG] Querying name servers for fu.example.com

[VERB] Error from 198.51.44.3: Non-Existent Domain
 [VERB] No specific name servers identified for _acme-challenge.fu.example.com
 [VERB] Query CNAME for _acme-challenge.fu.example.com at 198.51.44.3
 [VERB] Error from 198.51.44.3: Non-Existent Domain

I want to know how to setup DNS at Squarespace so that I can get the above working.

Do I need to create NS records for fu.example.com ?

I created a Cname record on example.com which looks like:

I created a txt record:

and I get the output shown above, and not working.  Please help.

Thanks