The back of the pads are pushing the pistions all the way in and the pads are against the disk. There is a little room now since they heated up though.
It's like the pads were too big.
I just had to replace pads and buy new rotors for mine, when I put it all together it was tight! I could turn the rotors by hand but there was drag...the opened up after a bit of driving...as long as you didnt heat the rotor and warp them.