Same thing just happened to me on my '87. I installed new pads and
rotors but did not rebuild the calipers and that was the problem. With
the increased width of the new pads and rotors, the caliper piston
operates in a different area of the cylinder, which is probably grungy
and won't allow the piston to travel freely. I had to pull off the
calipers and disassemble and clean them--that fixed the problem. Follow
the Bentley instructions for disassembling the calipers and be sure to
use new self-locking bolts when putting the calipers back on. I was
unable to easily locate a rebuild kit for the calipers, but my seals and
boots looked good so I just cleaned off the crud and reused them.
Another day of labor and a lesson learned.

-Mark McCulley
'87 syncro Westfalia

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I just replaced pads and rotors on my '88 Vanagon. (Girling brakes) I
thought
that I had done everything according to the manual, and even made sure
to add
caliper grease to all the sliding areas on the calipers.

However the brakes are always dragging, never fully releasing. If I take
a
drive of 10 miles or so, I can get out and smell the hot brake pads, and
the
alloy wheel is hot to the touch.