I am no Tech, but I know Braking Systems have to be 100% Air tight. IF you have any air at all in the system you get a "squishy" brake feel. You have to push the peddle further down, but the E-brake will still work fine. The E-brake manually engages your rear brakes. Have you changed or checked rear pads/shoes?

I replaced my front and rear pads, and had the slightest air bubble in the system and I had a similar feeling to the one that you are having now.