I would do next:
1. Check if rear dial works when used for other functions.
2. Check at manual if some settings cause rear dial to function different than usuall.
3. Check lens (lens contacts and camera bayonet contacts) is there some dirt or other things which cause informations between camera and lens are not interacting.
Oh, yes, as you reset all custom functions to factory settings, check does factory setting by default make rear dial to work differently than you expected
Next about reset, it reset only only some funtions to factory settings. For example only CF are reset, but other camera settings are not reset (atleast mine EOS3 reset works that way). Make FULL reset, that is reset custom function settings and all other camera settings to factory settings, then try.
If above things are not causing problems, I think camera is ready for replacing/reapiring.
Good luck.