If the pushrod attached to the brake pedal to the master cylinder is too long, it will 'hold' the brakes on slightly even with your foot off the brake pedal. This will not allow the calipers to fully return and will cause the pads to drag. They could actually lock up. Excessive heat and possible warpage of the rotors can occur.
The next thing to check is the residual valves. If you have 10 p.s.i. valves on the front lines to the calipers you will also cause the brakes to drag. In most cases where the master cylinder is installed on the firewall and above the calipers there is no need for a residual valve to be in the system. If the master cylinder is installed below the floor (as you write), then for disc brake applications a 2 p.s.i. residual valve is needed. Be sure that the master cylinder doesn't already have a residual valve installed in it. If it does it will be a 10 p.s.i. unit and can be seen just inside the outlet connection. It should be removed. A 10 p.s.i. residual valve is for drum brakes. It is also needed when GM rear calipers (the ones with the built in parking brake) are installed.
If you have disc front and drum rear brakes, then you should have a 2 p.s.i. residual valve in the front lines and a 10 p.s.i. residual valve in the rear lines. The residual valves should be installed close to the master cylinder.
You mention a proportioning valve. If it is an aftermarket adjustable one, it should be installed in the rear brake line only, after the residual valve and also close to the master cylinder.
On the dual reservoir master cylinder; if one of the reservoirs is larger than the other, the larger reservoir is for the front disc brake calipers. If the reservoirs are both the same size, it more than likely is for a 4 wheel disc brake setup.
As to the calipers working properly. Check the clearance between the pads and the rotor with no brakes applied. It should be between .015 and .030. Apply the brakes and then release. Re-check the clearances. If the clearances are now closer, then the calipers are not retracting properly.
Last edited by Frisco; 10-15-2011 at 12:52 PM.