I figured out the calipers were not binding up after all. It only seemed like it but in all actuality when I pried up on the caliper it wasn't realigning it, it was pushing the piston back and relieving the pressure. I replummed the MC to the proportioning valve and adjusted the brake pedal and I think everything will be fine. I haven't had a chance to take it for a test drive because I still have to reposition the brake light switch to make up for the moved pedal but I think everything will be fine. Still not sure why the pedal goes down when started but I can spin the wheels just fine when it is running and up on jack stands.
Thanks again everyone for your patience and help!