1991 560SEL: New Meyle rotors and Wagner Thermo Quiet disc pads - TIGHT FIT!!

[HuskyMan]

Installed Wagner Thermo Quiet brake pads on new Meyle vented front disc rotors.

I had to use a pry bar to move the pistons back far enough so I could install the brake pads. The instructions for these particular brake pads say to not install any chemical compounds on the insulator area (whatever that is). I went ahead and installed Mercedes Benz Brake paste on the backs of the pads and the holes as well as the brake pins.

As you can see from the photos, the pads are in their TIGHT! They are so tight the rotor doesn't spin freely. As a matter of fact, it doesn't spin at all. What am I doing wrong?