This has been an increasingly bigger problem for the past 2 months. At first I thought that this car (wife's'97 965 wagon) had a "softer" pedal than my older Mercedes (non-Antilock brakes). Yesterday I almost ate the rear of a pick-up in Atlanta and realized that something was wrong. The pads/ and fluid level are fine, jamming on the brakes at speed stops the car quickly and properly with the ABS system modulating the brakes. However when I "ride" the brakes as in stop anf go traffic, the pedal will go to the floor and the brakes are not very effective. At times it felt like I was at the floor but with more pedal pressure resistance is felt and the brakes work, other times no improvement.
Should I suspect the master cylinder to be bad or is there some type of Voodoo modulator in the ABS system that I should inspect?
Thanks!

Master cylinder is bad, classic symptoms, replace it. ABS has nothing to do with your problem. ABS only "intervenes" under certain conditions such as where a wheel begins to lock up and certainly not in light braking conditions you described. ABS cannot cause the pedal to go low in the manner you outlined.
--
David Hunter

Master brake cylinder would be my first guess, but I don't know how the presence of ABS will complicate that.
--
John Shatzer, '97 V90 @ 98K

Before you spend any money on the expensive items, you should:

1. Get the brake fluid reservoir cap really really tight (if you need to open it again, use a plier if necessary). While the engine is NOT running, pump the brake pedal a few times until you can not depress the pedal any more. If the pedal still goes down then your reservoir cap is leaking.

2. When was the last time you bleed your brakes? Bleed the brakes by using a tool like the motive bleeder from http://www.motiveproducts.com. I highly recommend Valvoline SynPower DOT 4 fluid. This is the best you can buy besides ATE, Motul and the rest of the expensive stuff.

David

I just bled the brakes, the fluid was a dark honey color. I went through 2 quarts of fluid to make sure that it was flushed. When the engine is off and I press the pedal now I can hear a buzzing sound coming from the engine compartment. I road tested the brakes and they feel a little better but I still have the issue of the pedal going to one position, resistance felt, more pressure on the brake pedal, then it "gives" and more braking action is applied. It just doesn't feel right...