Brake fade or another problem?

I have a 99 Boxster, lately with even short lived drives the disc brakes seem to be applying themselves and dramatically bogging down the car. I know the disks are hot both from smell and appearance. I have pulled the both rear discs off tonight to verify free movement and nor visial problems. They seem to be adjusted adequately. I have even run the car statically with powertrain engauged to eliminate the eliminate the possibility the parking brakes were sticking. It was only after driving the car again dynamically to have the fault return with the brakes slowly closing down and bogging the car. Is this a sign of bad brake fluid with water entraining? My next step is to bleed the system fully with new fluid. This has been very frustrating to me. I have the 101 projects book and visit this site often.

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[Nick at Pelican Parts]

Yes water in the brake fluid will boil and give a "spongy" pedal when the brakes are hot. This could also be an issue with the ABS and traction control systems thinking the wheels have lost traction and the traction control is trying to correct the possible spinning wheel

- Nick

[Quad]

I don't have traction control. Brakes don't feel spongy but they do definately engauge and drag the car during a short run. I will be bleeding the system.