My brake caliper is stamped with 15/16/FR/08. This is the system with a floating rotor. When on the stand with the chain off I rotate the axle by hand and can hear the pads dragging slightly against the rotor. And at a certain point it drags more and will stop the rotation. The clearance between the pad and rotor is around .001 on one side and less on the other. How would I go about increasing the spacing on each side?
First thing I would do is to check that the lever on the master cylinders go all the way back against the body, when the brake is at rest. Take the rubber cover off and disconnect the brake rod/cable at the lever and adjust the rod if necessary.
First off, you do NOT shim these brake calibers, they are self adjusting
From your video, that doesn’t really look that bad.
First, take off the top cover plate and the rubber insert on the MC, and check that the MC is not overfilled, there is a fill line in the MC reservoir. While that is off, push the rotor against the brake pads, so to move them just a very small amount, do both sides, check fluid level again and adjust if too high. Put it back together and pump the brake a few times using the pedal, make sure the MC lever returns all the way each time. If that doesn’t work, check for run out on the brake carrier.