Spongy Brakes Help !

What sort of housing/cable are you running.

Some of them are utterly crap. I got some clarks inners from CRC a few years ago. Enough stretch in them that when the pad hits the rim (about 1/4 lever travel) i can then proceed to squeeze the lever to the bar. And its ALL cable stretch. (Swapping to shimano inners got me down to about a 1/10th lever travel in squish)
 
The stays don't seem to be flexing, I have already checked for kinks but will check again. Would adding some Brake Boosters help ?
 
The other thing that could be causing slow return which has not been mentioned is the bosses.

You said they are clean so step 1 is taken care of. If someone over tightened the brake arm fixing bolt they could have bulged the boss or if the bolt is on too tight the boss may be bulging. Did the arm slide on smoothly and rotate freely? How tight did you crank down the bolt?
 
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