Earl, stepped diameter means the bore of the MC has two or more different internal sizes. The emergency or high pressure bore is usually the smaller of the two. Possible causes for excessive pedal travel, worn pads, air in the system, blown caliper piston seal(you would be losing fluid however). One other thing comes to mind, but I am not sure if it applies to MBZ. A stuck check valve in the vacuum boost chamber.

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Jeff Lawrence
1989 300e
2000 Dodge Grand Caravan SE
No matter what you fix, there will always be something else to fix..
"Warranty" is just another way of postponing the inevitable.