A couple of observations:
There are several things that will cause disk brakes to drag -- residual pressure in the master cylider, sticking pistons (usually more noticable on one pad), bad brake lines that retain pressure, and so on.
One thing to remember when replacing pads -- take the cap off the master cylinder reservior! The air orifice in the cap is very small to reduce the amount of water the brake fluid absorbs from the air, and stuffing all the displaced air out that hole takes quite a bit of pressure and time. I've know people to think their calipers were locked up!
ABS brake systems tend to have a slightly spongy pedal -- a sort of mushy zone between initial brake effect and hard pedal -- that can be disconcerting the first time you drive one. It's normal, and doesn't have the "air spring" feeling of air in the brake lines, more like a "remote control" effect where pedal travel gives additional brake response without addition pressure for a short amount of travel.
And if it has been a while since you changed the brake fluid, I'd flush in new while bleeding the brakes. Cheap insurance for that long hill on the interstate when you really NEED those brakes to stay alive!
1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!