I'd not drive if the rear wheel is not free spinning.
 

you should not have any issues turning the rear wheels by hand.

What should I try? :( At this point I'm thinking take the parking brakes out and drive it to my indy without them, see if he can see something. Because I can't think of a logical next step, other than just replacing everything in site. I could replace the cables but since the shoes are fully retracted that seems like it wouldn't help. My dad looked at everything and couldn't figure out what was wrong, but he's not an expert.
I'll double check the dust shields, because maybe they're not quite pushed onto the wheel far enough and are binding the rotor. That's all I can think of at the time ...

I'd remove the caliper, and have just the parking brake installed. see if there is any contact. then remove the parking brake shoes see if you can spin easily. you should not feel any resistance except for the gears and inertia from the opposite side wheel turning.

It definitely doesn't make a difference to take off the caliper, so I'm pretty sure it's parking brake. When I installed the rotor with no parking brake or caliper, it was easy to turn, with just the load of turning the driveshaft felt.
I took everything apart and tried tapping the dust shield back with a punch, because I figured if it was not all the way back, the parking brake would sit incorrectly. I carefully reassembled the brake shoes, making sure they were centered on that protrusion under the actuator. I also tightened the screw under the middle of the car just enough to take up slack (maybe too much slack is a bad thing?). Results of all the efforts: the driver's side turned a little better but still difficult. After applying the parking brake a few times it then turned almost freely. The passenger side, which started as the harder of the two to turn, actually now turns nicely. I took it for a test drive, everything felt good and I could hear no scraping. But when I checked it in the garage afterwards, the driver's side is again slightly difficult to turn.:( The passenger side still turns easily. I have no idea what I did right on the one side that I didn't do on the other. I guess I have to take the left side all apart again tomorrow, which is an awful thought. It's much improved from yesterday but it still has obvious resistance.
It would be nice to someday drive this car again.:(

You replaced the subframe, right? Did it come from a sedan? The sedan uses smaller rear rotors, and the dust-shield WILL interfere with the wagon rotors.
Just a thought.

she has a sedan.
you mean she might have gotten wagon rear rotors in there?

The wagons and the '94-'95 sedans have larger rear rotors. I don't believe that the larger rotors will fit the early calipers, so probably not then. I was thinking that it was a wagon, and the original brakes on a sedan subframe/dust shields worked for that one, ... probably not the other way around though as the sedan brakes will fit in the wagon dust-shield just fine.

Hmmm. so I should go back to the yard and pull the rear rotors from the 94 car I got the fronts from eh?
I'm liking the idea of better all around braking!

Yes. The '94 E320 has the same brakes as the '86-'93 T-sedans/wagons. They are larger, so you'll want to pull the dust shields if possible. Might as well take a drill (or allen wrench) to get the front dust shields while you're there, and don't forget that the front brakes on the '94 have two wear sensors on each caliper, pull the wire from the car so you'll have the correct plug (the single-sensor connector will hit the wheel).

The '94/'95 wagons on the other hand, had vented rotors on some, ... even better.

Happy hunting.

oh, then no big deal. I was talking about for my wagon.
I guess I could keep my eyes open for a 94+TE to get vented rotors from... cool.

There were two versions of the E320 wagon rear brakes, one vented and one solid. I usually don't get that lucky.

heh, after finding and getting that $500 87 wagon, I will not attempt to test my luck...:D

So if you loosen the star adjuster you can't turn the wheel freely? When I have adjusted my parking brakes it is possible to loosen them enough so that both wheels spin easily.

Did you bed the parking brakes in by making some stops with only the parking brake? You hold the release handle and gently apply the parking brake a few times.

The adjusters are both as tight as they will go. Somehow I managed to get the driver's wheel to spin freely after an hour of random tinkering tonight. I noticed the plate the bottom of the shoes rest on is tapered, so the positioning of the shoes on that plate makes a difference. No matter what I did I was getting a scraping though. Then I tried spreading the star a little bit with the rotor off, then pushing the rotor over the shoes ... idea being maybe it would center the shoes? Then I loosened the star all the way again ... and it turned freely. I have no idea if it was what I did that improved it, or if it just jostled into the right position coincidentally. I did try applying and releasing the parking brake several times. I also rechecked the passenger side (the one I had gotten to behave before) and it doesn't seem to move as freely now as compared to the one I just did. However, the one I just did does not have the caliper attached to it yet so that may be why it's even easier. I'm going to drive myself nuts.:confused:
I did not try using the brake while the car was in motion. I thought that was something one did with old parking brakes as a maintenance routine (to "clean" the old shoes)? If it's required on new shoes I will need to do that.
babymog, I did replace the subframe, but I used my old wheel carriers, hubs and dust shields. I had the dust shields loosened to get to the linkage bolts. Which is why I thought maybe I hadn't gotten the shields forced all the way back onto the carrier.

OK, both wheels turn easily now. I took the passenger side apart again and had a bear of time getting it not to drag. The trick turned out to be lightly tapping the outside of the rotor drum with a hammer. I did that on the driver's side too and forgot I had done it when I posted last night ... so maybe that was what did the trick there too. However, on the passenger side, when I applied the e-brake and released, it would go back to dragging a tiny bit ... then I'd tap lightly with the hammer and no dragging at all. I did that routine a couple times and now it seems to spin without dragging even after applying the brake. I took it for yet another drive, checked again, and both wheels turn freely ... so ... fixed? Hopefully. I think I'll have my indy take a look at it at some point, because now I feel like I have to check them every time I drive to make sure they still spin freely!
Anyhow, my third alignment appointment is Friday ... if I can get that done, I think I can call this project complete. Looking forward to driving it ... even just on a couple little loops around the neighborhood, I got a little reminder of what a treat this car is to drive.:cool: