What would cause one disk brake to drag? The other three are as normal, I thought that would indicate it is not the master cylinder. The caliper & pads seem to be as usual.The rotor turns freely when cool but after the brakes have been used, it will not fully release, causing a drag & the resulting heating.
Any other MR2 owners ever had this problem?
It's a 96,SW-20 with factory 15" wheels.

Sounds typical of a sticking caliper slider.
Remove the brake slider, clean, re grease and re install.
Best is to dissasembled the whole caliper and clean.

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Make sure you use the correct grease. I started a thread on this a while ago in the brake section.

Ray,
From your description, you have done nothing to alter the alignment of the master cylinder compensation port.
 
Do a caliper pin partial disassembly, clean up and re-grease as Carmikey suggests. Have a good look at all slide pin components for boot damage wear, grit or rust.  Put the pad faces on a straight edge to check for flatness. On re-assembly, Take care when doing up the guide pin bolts as they are required to be perfectly parallel and centered. There is enough clearance and part variation to instal guide pins badly. To clock them up, I just nip up the bolts lightly, then fully slide the caliper body into the anchor bracket a few times. Pins will rotate and center to find a happy place where there's no perceptible scraping. Carefully torque it up without disturbing the now mated positions. (Repeat the pin slide in/out to confirm). That should take care of the mechanical slide loads.
 
Now check the piston. Carefully slide the piston along its full travel a few times using a G-clamp and a block of wood  thicker than disk plus worn pads to ensure it cannot slide out past the seal. Just the sticktion can result in finger smashing loads if it binds and lets go. So use wood, not hand meat as an end stop. Use the brake pedal very slowly to go in the "out" direction. There will be no resistance so control your foot as if it's on the accelerator. Post a reply if the piston will not smoothly travel with light applied pressure.
 
All above hasnt worked? Piston retraction is due to the piston seal and groove acting like a return spring. Its performance will depend on its rubberyness and the grip to the caliper piston. Seals age and there are a very small % of duds with low retraction to start off with. Changing it to a fresh seal can help if the issue is insufficient retraction. Ideally, do this as an axle pair.
 
All these effects have production and assembly variation so yes, its absolutely possible to end up with one caliper in a set that's dragging. I have done this many times with new components prior to vehicle installation so the assembly order (unbolt anchor from strut Vrs swing housing on one pin to put in pads) might be off compared to your situation. 

Thanks carmikey, I will take it all apart & clean the whole caliper, I will also drain out all the old brake fluid & refill with new fluid. Thanks also 5sgte, I have looked up your thread & watched a couple of U Tube videos on sticking brake calipers, pistons & pads.

Ray,
I suggest you just do the mechanical checks above and find the root cause of the issue first. Mixing in a full bleed and refill without knowing whats wrong just adds more labour and uncertainty.

Thanks 2 late for P's; I am about to do as you suggest, While I was doing the caliper & pads I thought I would drain the old fluid as I haven't changed it since I have owned the MR2 & I don't know what the previous owner did. Even though I have not had this car on the road for long, I had in storage for 6 years, I did start it & drive it very short distances every month or so. Since coming out of storage I have put 26,000 Km on it in just over a year. Maybe the long time in storage has something to do with the slide pin sticking. The other thing is the problem has come up since I pressure washed the wheels, while on the car. I think some debris & brake dust have gummed up the slide pin now you mention that, before I washed the wheels it was all okay.

If you're a new owner get yourself a copy of the MR2 BGB (Big green book) service manual it's only a google and short download away.
 
Stroke the piston and reset the guide pins since you say it's been a long layup. Remember you must give the brakes a few medium pumps to advance the piston(S) back to service clearance once everything is back together again, before you drive. Write this as a post-it note message to yourself on the steering wheel before you start your fix. When you're done solving your caliper worries, you can bleed it. But avoid swallowing a spider to catch the fly.
 
You are using new fluid to push out old. Don't "drain it" or do anything that will put air in the circuit. Nearly empty the master cylinder of old fluid using a syringe. Fill it to the max mark with fresh fluid (hopefully it will be a slightly different shade). Go to the furthest rear caliper and do a bleed until you have all the old fluid out while topping up the reservoir with new fluid as it hits the "low" mark. Then do the other rear caliper, but only drain enough fluid to purge its line. Same story on the front. There is probably a guide in the net or service manual showing the additional unions or bleed points in the lines to have a go at for the job to be golden. I wouldn't touch them unless I actually had evidence of trapped air such as a soft pedal.
 
Dont let the master cylinder gulp air or undo any of the brake joints except the bleed nipple you're working on.
Trust the manual or if it's outside your confidence level get help.
 
Regards,
SteveB

Thanks to all for the tips. The brakes are working properly now. While I had it up on the hoist I checked all the calipers & slider pins, all work well now. An anti rattle clip is missing from one set of pads, my local Toyota workshop manager said that should not matter they are just to stop rattles, the Landcruiser ones he had would have to be cut & then they were the wrong shape.