First pull of the lever if pulls an inch ish, second pull half inch, and it keeps doing that until you leave it a small amount of time when it goes back to an inch. Obviously with the levers in a more normal position this means the first pull goes straight to the bars.
That is air still in the system, I used to have the exact same problem with a set of elixir 5s.
I was able to get them to work perfectly after a lot of faff, that faff was required each time I bled them - in the end I gave up and bought a set of SLXs.
However, make sure your calliper is aligned and that both pistons come out the same amount on both sides.
When bleeding place the levers 90 degrees to the ground.
If you have bled your brakes go for a ride, don't bleed them again - why? because the vibrations from riding will cause air bubbles to relocate and hopefully collect at the lever (I always found that the majority of the air will be in the lever).
Ideal scenario would be to go for a ride, remove the brake from the bike hang it vertically ensuring that the lever bleed port is the highest point.
For me I have found that when bleeding the lever it helps if you pull the lever syringe and hold it, then pump the brake on and off, keep doing this until large bubbles stop coming out (disclaimer, this is something I do, if it does any damage to your brakes I can only be sorry, but it worked for me).
edit: it isn't hoses or seals, I have replaced the lot on my Avids and I have always had that problem. I put it down to poor design in that the reservoir is too small and therefore any air in the system will affect performance.