Do you see any leaking around the caliper piston?
but really it sounds like you have air in the system.
Do you have some clear tubing that will fit over the bleeder nipple? if not get some (at least 4 ft).
Next, do you have some teflon tape? if not get some.
Pull the bleeder nipple out all the way, do a couple wraps of teflon tape. This will ensure that air isnt getting pulled through the threads. Replace bleeder screw, and tighten till it seats (not too tight).
Put the clear tube over the nipple. Make sure that the cap is OFF of the reservoir, and filled with brake fluid.
with the 8mm wrench in place on the bleeder nipple. begin to create a vacuum on the 4 foot piece of clear tube. (either by your mouth, or some fancy vacuum thing - a large syringe works ... but your mouth is actually easier... no hands required). You dont need much vacuum.
So now your at the point of having some vacuum in the clear line, slowly crack open the bleeder nipple, keeping a constant small vacuum to pull the brake fluid down through the brake line into the caliper.
It will probably start out with lots of air bubbles but get better and better. Once you have gotten it to where almost no more air bubbles are comming out... or the amount of air bubbles comming out has stopped decreasing. tighten the bleeder screw.
At this point follow the procedure laid out in post 7
and you should have a rock hard pedal. A lot of times when you get to a point where the lever / pedal is decent but still a lil spongy let it sit overnight. This allows the many small micro bubbles to mas into one bigger bubble thats easier to push out... following post 7 above.