Correct, the top of the pad does not touch the rotor (1/4" gap) while the bottom of the pad touches the rotor. I will post a picture of it later today. I agree the pads should retract but should'nt the pads retract evenly so that they are parallel to the rotor?

Just as a warning, I noticed the brakes did not grip as usual on the application after I left Allison bmw. I almost hit the guy in front of me! But with more brake cycles, it seems to be getting better. But still not as it was before.