TXT record is forwarded because of CNAME

I want to verify my domain name with google apps, by using DNS verification. This involves making a TXT record with a generated value by google.

However, I have a CNAME record for the "mydomain.com". If I use nslookup to query the TXT record, it tells me about this CNAME I made and gives me the TXT records for the CNAME'd DNS entry.

Is this a problem with my DNS registrar or is it normal behaviour?

You can't use a CNAME as a root for your domain. To quote Wikipedia's article on RFC 1034 :

An alias defined in a CNAME record must have no other resource records of other types (MX, A, etc.)

The reason for this is because the CNAME tells clients that (in essence) you need to look here for your answer, but this applies for the entire domain. So not only is your A record set to that, but any other record will be ignored. In fact most DNS servers don't let you add any other records to a Cnamed host. Check out RFC 1912 section 2.4 for a example of why it won't work.

Your only solution is to remove the CNAME and use an A record.