Likely the piston is cocked in the bore and rusty to boot from being run on too thin a rotor (why or why do people do this?????).

Try tapping the piston toward the bottom of the caliper while applying force INWARD -- if it's sidways, this may straighten it out enough to get it out.

Never use more than 15 psi of air pressure using a blower tip. Higher pressure won't likely move a stuck piston, but if it does come out, the high pressure air expands explosively, and the piston is heavy enough to crack your head (that is, kill you outright). Not funny. At LEAST put a board in there so the piston cannot come free, but it's best to use air only to push a moving one free.

Put the other piston back in if you havent yet, install the brake line but leave the caliper hanging, and use a C clamp to hold the good piston in place. Bleed the air out and STAND on the pedal -- likely you can get the piston to move a bit. If the pedal sinks, keep pumping until it pops out (no exposion here!). If you cant get it to move, get another caliper, that one is shot.

Do not use any piston that is not perfect below the seal, it won't retract properly and/or the pits will eat the seal and it will leak. The pistons are chrome plated, and should NEVER be cleaned with anything more abrasive than cloth and brake parts cleaner. Pits ABOVE the seal are OK, although they can cause trouble.

You can remove rust above the piston seal in the bore with crocus cloth, very fine sandpaper. or Scotchbrite, but you MUST NOT touch the area below the seal. Clearance is very tight, embedded abrasives (there will be some no matter what you do) will remove the clearance and the piston will seize, or you will remove too much material and the piston will go sideways and stick...

If in doubt, get a new one.

Peter

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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!