The "Brake Failure" light on the dash is on and the brakes are working perfectly well! I recently (last year) replaced all the pads and sucked out and replaced all the brake fluid. The brakes on this '76 308 are better than those on my wife's 2003 BMW X5! Could it be that the doohickey that regulates pressure to the rear wheels is stuck or something else wrong with it? Could it be a leaking air hose to the vacuum assist? If so, maybe that's why I also have fouling plugs, although I think the fouled plugs are due to bad carb adjustments. (A future thread if I can't solve that problem) Anyone ever had this problem?
I have heard of this happening. There is a switch on top of the proportioning valve and sometimes the switch goes bad or gets stuck. When it does it causes the light to come on even thought the valve didn't move over to trigger it. I have also heard of times when the prop. valve got stuck and I think the remedy was to remove the switch that turns the light on and push that valve back to the center.
There's also (I think) a level gauge on the brake fluid -- check if you're low. When you replaced the pads, did you reconnect the wear warning connector? (I can't say for an older 308, but the wiring on my 328 shows warning sensors on the fluid reservoir, and on the (front) brake pads for wear. If you use after-market pads which don't have the sensor, you have to be careful that the wire doesn't ground, or you get the brake warning. There's no sensor on the bias pressure regulator. (Maybe because of all the problems with the 308 one? ))
There was an article in the "shop talk" column in a back issue of Forza magazine on this...about four years ago. I don't remember the exact issue though...
There are 2 ways in which this light works. One is due to low brake fluid which is located in the top of the brake reservoir bottle and the other is in the differential pressure valve located under the front of the car near the steering rack. It is under a removable cover in the middle of the car. This is different then the pressure limiting valve which is located under the car (same area) but is only on the rear circuit brakes. So this differential pressure valve has a wire plugged into it that grounds out and turns on the brake warning light . In this valve is a shuttle valve that will shift if there is unequal pressure in the circuit like a broken brake line or a leaking caliper seal. So when you step on the brake the valve shifts and turns on the light. This is a fairly reliable valve but the switch (reed type) sometimes grounds out. So if the light is on at all times and the brake fluid is full then there needs to be an inspection of the system. Look for leaking brake lines , fittings and caliper seals. If all is OK then you need to pull the switch and recenter the shuttle valve. Also another reason you will get different pressure in the circuit is caused by an old brake hose that either collapsed or swells when you apply the brakes. So if you recenter the valve and the problem comes back you need to find the problem. Also may be water in the fluid causing pressure differences. There are no brake sensors in these cars. It is pretty much one of the simplest systems. Enjoy the ride.
Check fluid level, fill up, and find the leak. Bleed the brakes. And, if it still happens, then you mess with the switch.