this sounds interesting.
there are alot of people with a bit of movement in the pedal before it does anything. But once this slack in the pedal is taken up it brakes fine.
Would this be similair to your issue?
I have been told there is some adjustment on the pedal in this respect, could this be what they are refering to?
Mine had a faulty caliper, which i replaced but because it had lost alot of fluid i got a garage to bleed the system and fit the caliper. No i dont know what they did but the brakes barely worked foot to the floor.
So i decided to bleed all the calipers and master cylinder myself and top up the fluid, again i dont know what happened exactly, but the brakes had no travel (i.e. worked normally) but they'd stick on after a few minutes.
I then found out that they had to be pressure bled, so off to the local vw specialist who pressure bled it, no difference. they said it was a faulty servo, which i couldnt see on a car of that age. so i disconnected the brake vaccum pipes and drove home (not using the servo, bit dodgy but it wasnt far!)
This time i took it to a family friend who has a garage and he diagnosed it as the servo too, thinking it was leaking air. so we had a play around and took the master cylinder away from the servo to find that there is a screw behind it, which he said had worked its way right out. So he screwed it in, not convinced himself that it would work, but it did, many months later and no problems.
My guess is that the master cylinder tried to protect itself in some way from blowing a seal.
The screw in the master cylinder isnt used for pedal adjustment as far as i am aware