There's lots of theories about how the brake should work, I don't know what's true. The outside (piston) pad should retract slightly when the brake is released and the wheel should spin somwhat freely, there will laways be a slight drag with this brake design.
One theory is that the piston seal does the retracting, it gets squeezed under pressure and pulle the piston back a bit as it unsqueezes when the pressure is removed; any corrosion residue in the seal groove supposedly interferes with this action and hinders retraction. I dunno - after cleaning a groove beyond sterile I've had a piston still not retracting too well.
Another theory is that the master cylinder pulls back a bit when the lever is relaxed, the piston moves back a bit before uncovering the bypass hole, this pulls the caliper cylinder back. If there are air bubbles in the system they get compressed under braking and act like a spring, keeping pressure on the caliper as the piston moves back. I have seen sticky brakes free up a bit after a fanatical bleeding so I kinda believe this one a bit.
Regardless: When working perfectly, the outer pad will contact the rotor after braking. This is just the design, the spring pushes the whole caliper assembly that way on its pivot. The piston retraction will not be as much as your static pad clearance adjustment. After a while riding the spring pressure and just bouncing around and shaking the caliper back and forth should push the caliper in and the wheel will spin freely if the brake is working properly. If you coast to a stop (or just rear brake) after 10 minutes or so of riding without any brake use you should find the front wheel almost completely free turning.
The screw adjustment for the static pad clearance limits its how far the piston can retract this way, so that it doesn't go so far that the brake lever pulls all the way to the bar before the caliper is tight on the rotor again.
