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Compensating port! I knew there was a term for that second stupid hole! The compensating port is used to allow the master cylinder piston to quickly return to the unapplied position, as well as compensate for fluid expansion or contraction from changes in temperature. ... Hydraulic pressure...

Open the master cyl fill port up and look in with a flashlight. At the bottom of the master cyl reservoir there should be 2 holes. Make sure they are not plugged. Bailing wire should be a good "feeler" to make sure they aren't plugged.