Rear caliper adjustment

Hi my name is Phil; I needed some help with my brakes so I registered with this forum. I hope it helps!
I have a 1970 El Camino that had Power drum brakes. I bought the stock spindle Disk / Disk system from CPP and installed it on my car, There were a few problems I ran into: The proportioning Valve and lines Did not work together, I decided to stay with the stock lines and proportioning valve since I had a Drum /drum system and I figured the disk / disk system would proportion the same.
The system worked great for 2 years and then I developed a brake squeal and decided to change pads. The new pads were thicker and as I installed the rear calipers I found that the calipers were not centered on the rotors and I could not fit the Inside pads on. To fix this I removed 1/8” of material off the spacer that fits between the flange and the caliper bracket. Adjusting the E-brake lever I found that it is almost completely stroked before the pad makes contact to the roter which makes the piston travel farther out on application of the pedal. If I pump the pedal I have a good pressure to the rear brakes but if I don’t I can feel the proportioning valve apply pressure to the front brakes. I believe The caliper is suppost to adjust itself to take up this gap upon e-brake application. Is the caliper Bad

When changing pads you have to re-adjust the caliper e-brake again manually. You need to pull the arms off the caliper and ratchet the piston in to make light pad to rotor contact. This will make the pedal stay up. Here is a link to instructions for doing this:
http://www.classicperform.com/Instru...brakeguide.pdf

Thank you Aaron, When I first saw your reply I was going to respond right away with "I DID THAT!" but after reading the adjustment procedure I pulled it apart and tried it again. The caliper adjusted this time and now my brakes are better than they ever have been! That was alot of good information you gave me and I appreciate it! Thanks again