SOURCE: DeWalt DC500 wet/dry vacuum
I had the same problem and traced it down to the on/off switch. I sprayed some electical contact cleaner down inside the switch and now it works normal. Hope this helps.
SOURCE: dewalt dc500 won't **** in water
there is a float ball or reed that closes off the exhaust port inside the canister, to prevent water from filling too high when used as awet vac. If lodged or trapped it will prevent suction or discharge in wet and dry modes. look at the housing that the filter attaches to and you will see it. if it doesnt rattle when you shake the unit up and down, it is stuck; otherwise, you must not be spinning the fan blades.
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