Both calipers replaced now. As I explained previously, the NS caliper had a seized piston. The OS pistons are not completely seized but very "sticky" and co-incidentally, the retaining clips that I had a problem with were missing and one of the bars had backed out to the extent that the pad was no long properly seated.
Anyway, I bled just the calipers and tested it. The pedal is still spongy but even so the braking is much better and a 2nd hard pump dips the nose sharply.
I am thinking bleed the whole system again, (following advice regarding rear brakes) and drive a bit more to bed the new pads in.
If still spongy, I will then put the new original spec MC on as I cannot detect any play in the actuator rod. Or would it be feasable (or even sensible) to temporarily place a couple of washers between the MC & the mounting bracket to gain a little play and see if that resolves the problem?