Jason, Yes, & No.. the "seals" in your' calipers to piston, are square in cross-section... and when working properly deform when piston travels, and when pressure is released draws piston back into caliper. since pad is free floating, it may "relax" but not nessicarily be be withdrawn.. typically pad will remain in contact w/rotor. but should'nt have appreciable drag. the most common, but by no means all, causes of dragging disc brakes are. Build-up at piston to caliper, Build-up of old brake fluid within seal land, sticking pads within caliper, caliper frozen to fork stancion (where applicible), and clogged relief passage at master cyl. hope something here helps. G Ps, leaking at lever indicates leaking at M/C piston seal, & yes time for a M/C rebuild..