Hi there,
It still sounds like air in the lines to me. It's real easy to get a bubble of air trapped in a high spot that won't get pushed out during a normal bleeding process. Try to eliminate any possible air in high spots. Sometimes a very fast, forceful depression of the brake pedal when bleeding will move the bubble along. Sometimes one can very slightly loosen the lines at the master cylinder and force a bubble of air out there.
It is very normal for the pedal to be hard with the engine off, and go down when the engine is started, it is just a testament to the help the power booster is capable of giving you.
Sometimes a reverse flush will eliminate those pesky air bubbles.

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Richard Wooldridge
'01 ML320
'82 300D 4.3L V6/T700R4 conversion
'82 380SL, '86 560SL engine/trans. installed
'79 450SL, digital servo update
'75 280C