Seems most likely to me that your external speed controller has failed. Those things are realatively cheaply made, and they don't last forever. I had one, but that was way back in the 1960's. If yours is of that vintage, as Bones would say, "It's dead, Jim!"
PS: On second reading, I see you recently purchased this equipment. I would contact Dremel for a possible replacement under warranty. They are a reputable company.