If the fluid level was low, the BRAKE light would be on in the instrument cluster. It's not a fluid level issue.
Brake fluid is hygroscopic. It'll pull moisture out of the air. As the fluid gets more and more wet, it becomes more and more compressible, leading to the spongy pedal feel. Fresh brake fluid is all that's needed. Most fluid manufacturers recommend you flush the old gunk out every two years. (My brakes don't generally last that long, so it's not an issue for me)
To bleed, suck as much of the old stuff out of the reservoir as you can and refill it with fresh. Have a helping foot pump the brakes once or twice, then press and hold. As you crack the bleeder screw loose, the fluid will come out, and the pedal will go to the floor. Tell the helping foot to continue to push it as the pedal drops. When the pedal bottoms out, close the bleeder, then the helping foot can release the pedal. Again, pump a couple times, press, and hold.
Repeat the pumping/bleeding until the brackish fluid runs clear. Be sure that the brake fluid reservoir does not run dry at any point during the process. I usually get four or five pumps in, then check the reservoir just to be safe.
Start with the caliper/drum furthest from the master cylinder and work your way closer. That generally means right rear, left rear, right front, left front.
Hope that helps!
'00 F-150, X-cab, 4x4, Lariat, 5.4L Off-road, Trailer Tow, Holandia Sunroof($1000)Mucho mods
98 Explorer bone-stock (Lemon Law Case in Progress)
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I'm not smart, just a resourceful idiot with some spare time.