Erik:

Two things:

One, it's VERY STRONGLY advised to replace brake parts in axle sets (that is, both rear rotors and both sets of pads) to avoid having one side work and the other not. In your case, I suspect only one rotor is bad, and that is why you only did one.

You have a badly stuck caliper on that side, and if you had mud on there, you have problems on the other side as well.

You should either rebuild the caliper, or if you are not comfortable with that, I would avise replacing it. Rebuilt calipers aren't expensive for that car. I would ALSO replace the one on the other side, and bleed again (you've already flushed the brake fluid out!).

What has happened, most likely, is that someone ran the rotors too thin on the rear and didn't change the pads soon enough. This allows the pads to hit the anti-rattle spring, and that causes them to tilt since the top cannot move in any further. This cocks the pistons in the bores, and they stick there, causing the pads to drag badly, overheating the calipers and destroying the rubber seals. Water and dirt get in, and they REALLY stick!

I'll bet the pistons were pretty hard to push back into the caliper when you change the pads, right?

Get new (rebuilt, really) calipers for the rear, and plan on new ones on the front next pad change, too -- you'll be astonished by the difference!

The noise and heat are a result of the piston failing to retract on the seal.

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!