Here is a section of the installation instructions that you need to correct in your installation:
NOTE: This system is designed to connect to the brake pedal in the uppermost of the two pedal rod connection points usually found on most pedals. This connection point is approximately one inch higher on the brake pedal than the power brake pedal rod connection point. This upper hole is commonly referred to as the manual brake setting hole. If this hole does not exist on your brake pedal, you will have to remove the brake pedal and drill a new 3/8 hole in the brake pedal. In some cases, this mounting point is occupied by a bolt and a sheet metal tab. Rod angle between the brake assist unit and the brake pedal should be as straight as possible. Brake pedal rod angles exceeding more than 3 degrees off center may eventually fatigue the brake pedal rod causing failure of the linkages, and excessive wear to the assist unit due to side loading the input piston.
If you have the brake pedal rod connected to the lower power brake spec hole, this can side load the brake pedal rod badly enough to bend it if you have really stomped down on the brake pedal. Please examine the threaded brake pedal rod carefully to see if you have possibly bent it any. You should be able to get a clear view of it when you are swapping the connection point from the lower hole to the upper hole, and will be able to see if you bent it when spinning the rod deeper or shallower into the horseshoe clevis to adjust your brake pedal height. If it is bent, it most definitely needs to be sent back in to us to be replaced to prevent a possible future failure.
Next, we have observed that the spacer bullet that inserts into the deep MC pushrod hole on the MCPV-1 to be about .090" - .115"~ too long most every time we have worked with one (and have passed this info along to CPP). You mention that you have .050" clearance between the tip of our MC pushrod and the spacer bullet inserted into the MC. Did you machine down the spacer bullet any? I have baffled many any engineer that felt they had measured appropriately and completely by asking them how they factored in the radius of the round tip of our MC pushrod installed in the brake unit against the coned seat in the MC piston... Long story short, a flat MC pushrod against a flat MC piston seat could be measured in a simple fashion, but interfacing a coned seat against a round rod will toss most all quick measurements out the window as inaccurate. To cut though all the tech, unless you buzzed the pointed tip of the CPP supplied spacer bullet some, I believe you are up against a MC piston preload condition that is not allowing your pistons to fully release against the snap ring in the backside of the MC. How to nail it? Loosen the MC mounting bolts up about 2 full turns - if brake fluid starts dripping out of the ports on the MC just like it did on the bench = you have identified where your problem is and can now correct it and move on.
We have an article called Brake Bleeding 101 on our website that you should read:
http://www.hydratechbraking.com/Hydratech/tech.html
Oh yes - one more thing: Uncap the brass low pressure return nipple on the brake assist unit during bleeding (since you don't have the PS system plumbed yet), as this can hold some (mild) pressure inside of the brake unit. This is a very minor point of little consequence only worth minor passing mention. You would also do well to place a towel under the brake unit, as it may expel some PS fluid out of this nipple when uncapped / unconnected (as these units are all live dyno tested and therefore full of fluid). Please also be very cautious about dirt and dust...
Let us know what you find -