A flex shaft is exactly what you need. You will need to find some diamond bits though. A quick "Google" search should yield ample possibilities. http://www.google.com/Let us know how it works out.
Mike Spencer
Most rock shops (see yellow pages under Lapidary) carry small diamond bits. They are a thin wire with diamond powder glued onto or sintered into the wire. We can special order them but I think you can find them locally. Nearly all the Lapidary dealers on line carry them. Ebersole, Eloxite Corp, cyberrockhound.com, Rio Grande, Rock Haus Intnl, Diamond Pacific, mytoolstore.com, etc all should have them.
Diamond bits need to be run wet. That is, you need to put the bit in a Foredom, Dremel or other small drill and submerge the object in a shallow tray of water. I usually move the bit up and down so the water can touch the bit and take the heat from the bit. Using water as a coolant keeps the diamond from burning off the bit and keeps the opject being drilled from overheating and cracking.
I put a small piece of brittle styrofoam (the kind x-mas balls are made from) in the bottom of the tray and rest the object on it, This keeps me from drilling through the bottom of the tray. (Experience, eh?)
Here's a link to an article on this using a big drill press:http://jewelrymaking.about.com/library/weekly/aa051901.htm
My setup with a Dremel in a tiny Dremel drill press stand is somewhat smaller.
Hope this helps.
A small Dremel drill will work, also but you already have the flex shaft tool.
What are you trying to drill?