Ya, I suspect that you have a similar issue to mine.
I'm not really familiar with vacuum bleeders but it is either introducing air back into the system or is sucking air in from elsewhere causing the fluid to foam.
Since you get fluid past the bleed screw when closed the seat in the caliper is dirty or shot, inspect it making sure it is clean and the same shape as the bleed screws taperd end, it's not the threads that seal but the screws tapered end and the seat in the caliper but I'm sure your aware of this
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if the seat is shot you'll have to replace the caliper. I'm not aware of a way to repair this as of yet.
Maybe (if the seat in the caliper looks good)
- replace the bleed screw, if it was corroded it could be pitted etc. not allowing a seal.
- crush washers at the brake line/ banjo bolts, are they there, did you replace them, are they in good condition? just a thought.
As for the helicoil to fix the caliper threads that's your call, I'm sure it would work but if it fails the brake is an essential system to go out.
Was back bleeding with a large syringe or a suction tube(gun) covered already in this thread ? that's the easiest way.
I know Drewpy and a few have replaced thier calipers with ones from an R6/ R1 and an applicable rotor, maybe we the XS400 community could find someone to machine us the applicable components for this upgrade and sell them as a kit, I'd sure be interested in one.( might start a thread about this to see if theres any interest)
let us know if you find a solution.