Buy a drill press.
Then some sort of powered metal removal device for rough profiling. A belt grinder works best, but a bench grinder or an angle grinder works fine too. Or a bandsaw.
Buy NEW files. Used files are worthless. Contrary to popular belief files don't last forever. They are dirt cheap so why waste time with dull ones? Well, they might last forever on soft metals like gold silver and brass, but not at all on steel.
A dremel is about the least useful power tool for knifemaking. They're okay for texturing and such once a knife is finished but pretty useless up to that point.
With a drill press and good files you can make anything. You could do it without the drill press too but it would be a real pain if you want to make anything that needs accurate holes. Besides, a good hand drill costs as much as a cheap drill press anyway.
Here's a framelock tutorial I did with files and a drill press. I tried to set up the whole thing so that every step could be done by a guy working at his kitchen table with simple tools.
http://www.bladeforums.com/forums/showthread.php/879116-Frame-lock-WIP-how-to.