JP! Can't be bothered to read all the stuff here but there are only a few things that can be wrong
1. air in the hose, unlikely if you've bled it, I did Shay's on Sunday by injecting from the bottom, not Shimano method but it's how you do magura's, worked a treat
2. pads/rotors contaminated, this might make you think it's a spongey feel cos it's not stopping you as quickly as you'd expect, I have managed to marginally improve mine by scrubbing everything with IPA, think you need to replace the pads though. Doesn't take much oil either, touch them a bit ith your greasy hands and it'll ruin them forever as far as I can tell.
That's pretty much it!