The speed you are running is about appropriate. I would guess you could get by with somewhere around 80 SFM (surface feet per minute) on a high speed bit in grade 5 bolt. That would make the correct RPM 977 (SFM/DIA/.262=RPM). You can get by with a feed rate of .005 IPR (inches per revolution) or since your running 977 RPM you will be feeding at 4.8 IPM (inches per minute).
I would recommend in a home shop environment a black cutting oil, in an industrial environment we'd use a coolant (water mixed with soluble oils). If you ever go to the Kool Mist setup, never use regular cutting oils in it, and be careful of the coolant you use. Remember you are blowing mist and you'll be breathing the stuff. Check the MSDS sheets carefully.
One common mistake drilling is lack of feed. If the drill is babied too much in high or sometimes even medium carbon steels, you can build up too much heat and work harden the piece making drilling almost impossible. The condition is aggravated by dull or improper ground tools.
It could be like was suggested a build up of chips in the bottom of the hole, spinning and keeping the bit from getting a bite on the material. I've had that happen on drill presses lots of times. Proper feed and chip control are the key to eliminating the problem. Air blasts can get the chips out, but like you said wear proper eye protection.
I would never recommend a carbide drill bit for a hand fed drill press in general. While the bit is much harder, it's way to easy to over feed it at hole exits and shatter the tool. Just my opinion. By the way if it's a good carbide bit you could run 2100 RPM and 10.5 IPM. If it's a masonary style carbide bit, the geometry is all wrong for metal and that's the whole problem.
Good luck with your project.