It's odd that there really hasn't been any threads about a bad ABS causing this issue. I did a ton of searching and only found an offhand comment in a 987 thread. So, I figured it was quite rare. Then you post you had the same problem recently and Mueltone has PMed me that he think he has the same issue. So...there are more ABS problems out there than I expected.

I wonder if the ABS units are rebuildable? I worry a bit that my replacement unit is that same age and will start to do the same thing in the near future.

That's a long, frustrating but good result!!!

Congratulations for finding the root cause, and thank you for posting your results!
.

Booster Issue
 

I had pretty much the same symptoms & it was the booster.

Rotmilky, thanks for your detailed outline of the progression! I also have an 01 986S that is exhibiting the same problem. It happened during a recent track day, where we were working the vehicle (and ABS) to its limits most of the day. I'm running race compound slicks with stock pads so the forces (and pressures) in the braking system were at a maximum. Based on your journey, I'm actually going to start with a used ABS pump and see if that corrects the problem. I'll make a point of reporting back my results and hope somebody else can benefit from the insights.

ABS replacement worked.
 

Just wanted to close out on my issue above. Thanks to eBay and $75 I replaced the ABS unit with an identical part number, i.e. had the same stamped part number and was from the same model year vehicle ('01 986 S).

After replacing the ABS unit and a brake fluid flush to all four corners, the brakes feel like new. No sponginess and they do not slowly compress after the initial contact.

When it failed, I was running stock pads but with race class slick tires (Toyo Proxes RR), and intentionally pushing the brakes to threshold several times on every lap (including occasional ABS activation). I suspect I was pushing the ABS to its limits. It would have had max pressure and coefficient of frictions of the tires was beyond what the engineers tested for 20 years ago.

Hope this helps the next guy...

(BTW, as most of you know, the brakes on the 986 and 996 are virtually identical other than tuning)

wow great detective work. looking at the clues... and resourcefully finding a reasonably cheap fix... (three mc later!) and hope you did the work your self vs rack up tons of labor... looking at similar problem now...

brakes locked up while driving, glowing red hot formula 1 style...

called tow truck, while it was on its way, brakes released (we talking so hot, the brake wear indicator wire caught on fire), and drove home...

drove around the block next day, no problem then the lockup situation happened again.

enough such that the rear tires would lock and skid

tried to bleed the system, and not able to push fluid through the rear brakes, not with motive push bleeder, foot pumping or vacuum tools... even started the car to run vacuum to the booster for more pressure

removed the rear calipers, inspected, appear okay and reinstalled and still cannot bleed the system, fluid will not flow

suspect: master cylinder, abs control unit

plan: disconnect abs unit, consider to bypass and bleed system to determine where is the fluid being stopped from flowing

perhaps look for spare abs unit and hope to find one on ebay

my 2000 986S has 65,000 miles on it... sucks!!

I know this is an old post. But I'm going down this same path. A new master cylinder didn't fix it I'm going to do the ABS pump next. Another symptom is the rear pads wore faster than the fronts after some track use.