Brake issues

Over the weekend I helped a guy out at the Easternats (local car show/comp). He had a 260Z 2+2 with a tunnel rammed 308 engine. He was having problems with poor brakes, spongy pedal going to the floor and lousy stopping power.

In order to compete in the burnout competition he blocked off the rear brake lines and also had a leaking master cylinder, he admitted that the brakes had been allowed to run out of fluid.

A working master cylinder and booster from one of my cars was fitted to his car but the problem still remains.

Any ideas on what could be wrong? would the proportioning valve be directing fluid to the blocked off rears? As far as I know the system was well bled and there are no leaks.