I'm a Machinist, I might be able to provide some insight into what you are doing.
First, how deep do you need to go? I assume you are doing this with a hand/pistol drill? Decent cutting fluid is probably a good idea, WD-40 can work - I've used it before when I didnt have anything else at home, but for something of that hardness, something better wouldn't hurt. Make sure you keep the drill cool.
Solid carbide is a no-no in my book as far as doing it that way, if you break the drill in the hole - especially a deep hole, you probably wont be able get it out unless you are lucky. Solid Carbide will also fracture faster than a cobalt or high speed steel drill.
I'd suggest a cobalt drill or a high speed steel (most common) with some cobalt in it, coated or not - since you're only going to drill a few holes no need to get real expensive and technical with it, but don't buy a cheap drill you can find anywhere. Also, as stated, start small on the size and work your way to the finishing size. I'd also recommend in buying a center drill or a spot drill versus using a center punch.
With the hardened steel and especially cast iron, it's almost better to spoon it out versus having something really sharp as depending on how good at finesse you are, you can fracture the drill point or render it dull within a few seconds of cutting.
Since you have a hole already there, you can buy yourself a finishing endmill, centercut or non-centercut - doesnt matter unless you dont have a hole there. Drill out the remaining using a 1/2 endmill. 4 flute would probably work best for the endmill route in what you're doing, again.. lots of options with endmills; carbide, HSS with tons of different coatings, etc. etc.
Again, this is all done by hand so anything will really work, you can go whatever route but if you go the cheap drill route make sure you get yourself some extra drills.
Here's a website to check out that has everything you need;
http://www1.mscdirect.com/cgi/nnsrhm