Apologies in advance for the long story.
I once had a brake bleeding issue that in the end I couldn't fix. A single piston floating caliper similar to XS650 with an 11mm master cylinder. I fitted new piston and rubber seals to the caliper, used a new master cylinder, brake line and banjos. Effectively a very simple new front brake system. I spent maybe 7 hours a day for three days and over a litre of brake fluid trying to bleed it. In the end I gave up and got another caliper. What was happening is that I reverse bled the system to fill it, then used a vacuum bleeder to remove bubbles. But when I pulled the master cylinder lever in, the caliper piston would move out a fraction. When I let the brake lever go, the caliper piston was pulled back in by the rubber seal. The lever never felt better than mushy. So..... I never managed to get to a condition where the caliper piston moved enough to overcome the dragging back of the rubber seal. The caliper sits on the bench to this day. I really have no idea why it did what it did as everything is mechanically perfect with it. Hydraulically, it's as if the 11mm master cylinder wasn't pushing enough volume of fluid to actually move the caliper piston enough to overcome the seal dragging it back. At each pull of the lever the caliper piston could be seen to advance a bit then withdraw as the rubber seal pulled it back.
Sounds familiar?