A quick update, and to say 'thank you' to everyone that chimed in on this topic. I was able to drive the car to a local shop this morning (~1 mile away) and they bled the brakes which took care of the problem completely, as far as I can tell. He said the rear driver side (the one I was messing with) sputtered out a big slug of air while the other 3 corners had little to no air come out. He had to add a very small amount of fluid (Pentosin Super DOT4) to get the reservoir to the correct level.
Now that the problem seems to be taken care of, I want to write out what led me to this problem in the first place, so that hopefully nobody else as inexperienced as me will find themselves in the same predicament. Sorry in advance for wall of text:
I searched on the forum for a DIY on replacing the rear brake pads. A few of the threads I found contained links to the tutorial on the Ross-Tech website, so I followed the Ross-Tech instructions which detail all of the steps for disengaging and putting the electro-mechanical parking brake into the service position ("start lining change" mode if I remember correctly). When I got to the step in the Ross-Tech tutorial that says "Change brake pads", I removed the two bolts securing the caliper, removed the electrical and hydraulic lines from their brackets to give myself some slack to work with, and wiggled the caliper off the bracket.
Here is where I went astray and stupid/lazy. I was under the impression that putting the EPB in "lining change mode" would fully retract the piston so as to allow easy removal of the caliper from the bracket, and allow enough space within the caliper to allow assembly with the new (thicker) brake pads. When I was removing the caliper I noticed that it still took a little force to remove it, i.e the piston was still touching the back of the inner pad. I wiggled the caliper off of the pads and bracket, removed the existing pads and inserted the brand new replacements, and then of course when I tried to put the caliper back on the piston was too far out to fit behind the inner pad. I thought to myself "hmmm, I must not have properly disengaged the EPB because the piston is not retracted sufficiently into the caliper. I better cycle the EPB out of and back into lining change mode to get the piston fully retracted so I can install these new pads". THIS WAS ABSOLUTELY INCORRECT! Putting the EPB in lining change mode does NOT retract the piston itself, but it disengages the electro-mechanical parking brake device from the piston so that the piston can be manually compressed back into the caliper just like one would do for any conventional brake caliper. I know most people here would say this is obvious, but to me it was not. The combination of the Ross-Tech instructions saying simply "change the brake pads" and everyone saying "don't manually compress the piston because it will damage the emergency brake" led me to do what I did. I'm not blaming anyone but myself - I simply interpreted the instructions and warnings incorrectly, and clearly have no formal training on any of this.
So, getting back to it - the caliper was off of the bracket and I decided to cycle out of and back into lining change mode. Well, while the piston does not appear to physically retract when entering lining change mode, it sure seems to push out until it hits something when ending lining change mode. Since there was nothing in the caliper for the piston to hit, it just kept extending until it hit the end of its travel (I suppose). The dust boot was fully extended, and the piston must have been protruding ~2 inches out from the back of the caliper. Immediately I knew that was not a good situation, so I cycled back into the lining change mode and while I could hear the EPB mechanism disengaging, the piston did not retract at all. When I tried to compress the piston back into the caliper with a brake pad spreader tool, it would not budge. That is when I decided to open the cap of the brake fluid reservoir, at which point the piston pushed back into the caliper with ease.
We are still trying to figure out physically where the air entered the line. Presumably it occurred when the piston was fully pushed out of the caliper, so the immediate thought was that the piston came out far enough to allow an air gap between the piston and seal, thus allowing air into the line; however, I checked very closely for any leaking brake fluid and was unable to find any. The tech at the shop this morning agreed that there was no apparent leaking brake fluid. He thinks that possibly there could be some between the piston and the dust boot, but boot creates a good enough seal to contain it.
What I learned:
1) I'm not qualified to do various routine maintenance items on this car
2) Once the EPB is put into lining change mode via VCDS, the caliper is just like any other floating brake caliper I have encountered, meaning the piston can be (and must be) compressed manually to allow installation of thicker brake pads
3) How to bleed my brakes at home (although I ultimately had the shop do it for me this time)
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