Back the four firewall bolts off a coupla turns, so the m/c is kinda loose.
Try the pedal.
I've had the pushrod to pedal bolt bind.
It's a special shouldered bolt, and the whole pushrod/pedal thing has to pivot freely.
Did that, I see no bind there. With the bolts loosened, the pedal will move about 1/2 inch or so.
Would this not have to be a situation where the piston on the MC is not moving all the way. Like I mentioned, when I rebuilt the brakes and bleed it, I had normal pedal action and brakes.
I will order a new MC. They are all probably rebuilt in China!