Wrong hook up at the master cylinder? Not all MC's have front reservoir going to the front brakes - I would check with the supplier/manufacturer. I'm wondering if it doesn't have a built in residual valve keeping a couple pounds of pressure on the pads. If it is a MC built with this feature - and the line was meant for rears with DRUMS... i.e., a combo valve or a residual valve built in.
There was no reason to "look" at the MC if you have pressure on it from a improperly set up brake pedal/rod.... you should have 1/2" minimum dead pedal -- where it moves that much before ever pressuring on the MC.
The calipers appear to be floating....
With no pressure on the MC -- you should be able to "move" the pads a bit... are they loose with no pressure? You should be able to at least rattle them.
Since the car works FINE COLD -- it would seem to me that you have residual pressure on the calipers causing just a bit of drag - then with the continued heat of that drag - the brakes get hot and you've got your trouble. Try spinning the tire cold - then have someone apply the brakes - and spin it again to see if there is now residual pressure/drag.
If someone put the lines to the calipers using teflon tape - a no no - make sure you remove that tape. The problem comes from a little of the tape clogging the line. It might move with pressure from the master cylinder - and then act like a check valve as the pads try to retract...
Is there a combo valve in line? If so -- make sure it's plumbed correctly.
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