There are several possibilities here.
First, I would jack up one corner at a time and see if the brakes are doing anything. If you have good pedal and nothing happens at the wheels, you have either scary bad brake hoses (check for swelling) or bad calipers.
A classic "neglect" syndrome on MB brakes is to fail to replace the rotors when they get thin -- about every third pad change. This lets the backing plate on the pads hit the cross spring, and cock, since they can only move at the bottom. Eventually, they stick, and cause the calipers to overheat. This makes the brakes even worse -- no pad at all.
I cannot imagine that you got the pads in wrong on this car, so I think we can ignore that possibility.
How hard was it to move the pistons back? Very difficult, or did the just slide back with a gentle pry?
Did you clean all the rust and brake dust out of the pad slot and lubricate the back and sides of the backing plate with antiseize?
Do you have OEM pads (don't use aftermarket ones, they are endless trouble).
Did you do front and rear pads?
Are the rotors in decent shape -- that is, flat, or mostly flat, no bit waves and no evidence of the center being thinner than the outer edge?
Were the old pads touching the antirattle cross spring?
It is entirely possible that the rotors a worn in a taper if the old pads were up against the cross spring, so that the new pads are only touching at the outer edge. If this is the case, you should replace the rotors, they are too thin to machine.
I can help more with more info!
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!