Mike,
It sounds like your pad springs may be broken. This happens often. They get rusted and the small rivet holding them together simply fails. These springs force your pads away from the rotor when the brake is not applied. You can use a POP Rivet gun and get them back into shape otherwise a kit for the front calipers (springs and pins) is roughly $45 bucks!
Speaking of pins... check your pad pins. Your pads are held into your caliper by these pins and they literally slide back and forth on these pins. Corrosion on those pins could be hindering the pads ability to travel back to where they should be. Dan (xboost90??) had an interesting fix for those in his resto thread (if I recall properly). He put them into a drill and used Scotchbrite pads to make them look new. I like to bead blast them and replate them. They can rust and corrode quickly.
Good luck.