No it doesn't go fully home, it retracts just enough to stop the brake binding, did you clean the groove where the seal sits inside the caliper, if not that's most likely the problem. The idea is that the seal distorts as the pad is forced outward by the fluid pressure, this distortion is what allows the pad to retract. The floating pad will only move back around 1-2mm in total, just enough to allow the pads to release from the disc surface. If the groove is full of crap (and most are) the seal won't distort properly and thus the pad won't retract properly.
The fixed pad should be set using the adjusting spring and screw, there is a set gap but I tend to get the pad to just touch and back it off a little, always seems to work just fine afterwards.
Do the setting of the fixed pad before you pull the brake lever the first time, or fully retract the piston into the caliper and then set the gap.