that rubber "gromet" you see cracked is just a dust cover, it doesnt hold pressure or fluid, there are o-rings up inside on the piston that do all that work, and my guess is if they go bad it would leak fluid out the bottom of the master, pull that dust cover down and see if theres fluid in there, or would it be coming out of the cracks??,
and there is prolly still air in the system somewhere, are you bleeding them with the rezzie cap off, that seems to work better for me, be sure not to run it dry...keep it full
try gravity bleeding it, crack the bleeders and just let it ooze out, also try holding the caliper higher than the master so any air trapped in the line will rise up and out, also try holding it below for a few bleeds,
bleeding brakes sucks, gonna get me a vacuum bleeder soon, you may wanna try that too