According to what you are describing the rotor needs to come out farther to hit the outer pad. It looks like you are maxed out on the spindle from what I can see. Even with the piston fully retracted I don't see how you can have 1/4" gap. Looking at Dave's picture it looks like the caliper is right up against the bracket. There's also more bolt showing than in your picture. In your picture it looks like there's a gap. Is there something preventing it from going closer to the bracket.