The OP states that he 'bled' the system including the VCM several times'. You cannot bleed the VCM without BUDS, so I'm wondering if that was actually a meaningful process for him, since he then states, 'Took to the dealer and they did the BUDS system', which makes it sound like adding BUDS was a new step in the process.
Though all of this is a moot point since the VCM and master cylinder were both replaced by the dealership. No respectable mechanic would do this without a full system flush.
Assuming that all of the listed steps have been done correctly, and if the OP’s input is accurate, I am surprised that the dealership said things are ‘OK’. Only 2 possibilities here, in my opinion.
- The system is, indeed, OK.
- Or, it isn’t OK, but the technician is out of ideas.
I would ask if this issue began immediately after the brake pad replacement, or has it been building over time? Was the adjuster particularly difficult to turn in when you replaced the pads? Was the adjuster found to be outside of the threads and disconnected from the caliper during the pad replacement?
At this point, my first inclination would be to look at the rear brake caliper. After getting the soft pedal, reset the parking brake, give it a second to seat fully, then try again. If the hard then soft pedal scenario repeats itself, it could very well indicate that something is up with the rear caliper. The self-adjusting threaded piston may have been damaged or somehow become stuck during the brake pad replacement process. As your pads wear, (fastest wear is during the first few hundred miles) if the self-adjuster doesn't keep up, the gap between the pads and rotor will increase.
Setting and releasing the parking brake leaves the rear pads up against the rotor as they should be, but after moving, the piston will retract to its base position. If all is working well, there isn't any appreciable difference between the two. But if the self-adjusting piston is not functioning properly and retracts too far, an excessive gap is created. Brake pedal travel is increased and braking function is reduced. It really doesn't take much.
A 2nd cause could involve a problem with the rear wheel. If it were not reinstalled correctly, or if the wheel bearings are going bad, or if the bearings have lost their tightly pressed fit to the hub, this can create enough slop (it doesn’t take much) to give you this issue. This can be verified by raising the rear wheel and forcefully attempting to move it left to right. There should be no movement or feeling of any slack in the system. You should remove the drive belt to release all tension on the rear wheel which could hide what you are looking for.
I hope this helps....