I'm getting a very similar problem, different outcome, still no solution. Not very surprising though. I'm very novice at being a mechanic, but I still try. :)
Front brake was sticking and making an increasingly horrendous squealing noise and making it pretty tough to walk the bike around.
I applied some bluing on the disc (not the brightest idea in retrospect), and find that the pad was in fact contacting the disc.
I attempted a brake adjustment, but after loosening the adjustment screw so it turned freely, the pad was still in contact with the disc. Same as OP.
So I do what I always do with stubborn brake cylinders and I wedged a screwdriver between the pad and the disc. It's not giving particularly well, so I threw on a janky bleeder kit and opened the bleeder valve.
Eureka! The piston retracted. Then I bled the brakes lines (poorly because of my janky kit and inexperience), and I completed the adjustment.
I mount the bike and don't even pull out of the driveway before I find that the front brakes are soft, but weirdly the lever is still pretty stiff.
So I bought a better bleeder kit and all new brake fluid, then flushed the system and bled the brakes the right way: open the valve, squeeze and hold the brake, check the bleeder line: no bubbles, close the valve, release the brake. Repeated several times over for confidence. Also, no bubbles coming from the master cylinder. (I didn't check the brake fluid pressure with the vacuum pump, but I can confirm later.)
Still no dice. Front brakes were soft, even though lever was firm.
I attempted another brake adjustment. Same deal. Wheel didn't want to rotate freely unless I manually retracted the piston (even then it sounds like it's contacting). I cleaned the disc with contact cleaner and engine degreaser, thinking maybe the bluing I used early on was affecting the pad/disc interaction. Still no change.
Here is what I think my next steps should be:
1) Verify the brake fluid pressure (not quite sure what it should be), and attempt to bleed brakes again.
2) Inspect pads for gunk (like bluing). Replace if necessary.
3) Inspect piston for gunk that could be impeding extension/retraction. Clean per post above.
4) Check pivot arm per post above.
---or---
1) Call a real frickin' mechanic already!
Anyone got any other suggestions, or am I the right track?
1974 CB750
Sunnyvale, CA