I had a very similar problem and solved it. I could get the dictation popup to appear by pressing fn twice, getting the three processing dots afterwards with a negatory shake and no text output. After trying everything else, this was easily solved by selecting "Internal Microphone" from a tiny, nearly hidden dropdown menu in the Dictation Preferences menu. This is below the dictation microphone symbol. When the correct input is selected, you should see the purple fill in the icon respond to sound input.
Following is extra detailed info that may be further helpful diagnostic for everyone who is having similar problems. I had to figure this out on my own, people who have it working don't know the various ways that it can break and how to diagnose what is wrong. The icon gave me a hint that this is a simple input connection problem -- nothing to do with users, login items, or internet connection (which still could be a problem for a small number of people).
To all who are having similar problems with dictation not working, you should be able to diagnose this problem easily:
- Large picture symptom is that you can call up dictation but not get any text output, despite internet being connected and dictation being turned on.
- After releasing fn, pressing enter, clicking done, or otherwise signalling that you've completed dictation, you see the three progress dots that indicate server processing. They flash and after a moment the entire dictation popup shakes. No text is produced.
- Dictation mini-popup (after pressing fn twice) shows the dictation microphone icon, but the purple fill of the icon does not visually respond to sound input. This is a sign that dictation is not listening to you.
Solution: You need to get that icon to respond to audio before dictation will work. This is not a static icon but one that should fluctuate depending on sound levels going to the correct input source.
Input source is set in Dictation Prefs, not in sound input prefs. You could be forgiven if you missed it, it's very subtly placed under the dictation icon.
"Automatic" seems to automatically choose the wrong one for me, a sound editor application. However, mileage may vary, obviously there are a lot out there that it works fine for. Those who plan to use multiple mics at different times may be pained if they can't use an automatic setting. Anyways, "Internal Mic" worked for me, do whatever you can to get that icon to "come alive" and show some sound levels.
- Similarly to the dictation popup icon, the Dictation preferences microphone icon is a live icon that should show volume level feedback when the correct input source is selected. You can select the source in a hidden dropdown under the icon. 