Carbide and a can of "cool tool", you might get your 1/8 drill through.
Are you sure it isn't case hardened? Take a stone grinder and grind 1/2 in the area you are trying to drill. You might have to take it in a bit, but case hardened is very hard for the first 1/16 to 1/8, then it is a little easier.
Just my $0.02 worth.
