Sounds like the the caliper piston is hanging up. Be absolutely sure you have bled all the air out as well. If any is in the caliper, it will expand and apply the brakes.
The runout of the disk and the "grippyness" of the piston seal retracts the pads enough that they just skim the disk as you ride. If they heavily drag, I'd start by pulling the caliper, using a c-clamp and push the piston all the way in. Pul the master cylinder cap , mop out the old fluid, being sure not to get it on paint, as it is a great paint remover. Fill with clean fluid from a sealed container( brake fluid sucks moisture out of the air like a sponge) Remount everything, then after pumping up the system with the lever a few times, bleed the system until clean brake fluid comes out the bottom.
If it still drags, rebuild/replace the caliper. The chrome on the pistons often peels and then the piston pits, hanging up the piston. I think MikesXS sells the pistons separately.
Good luck. Old brakes are often a real pain. If the hoses are originals, replace them with the braided steel type. Hoses are only good for 4 years, so I'm guessing yours are older. Replace it all.