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I've got 785's on my gravel bike. The block that came with the caliper just slid in and I needed the pin to keep it in place. I had to install the entire system then fill and bleed the brakes. The only way the lever could bottom out with the block installed is air in the system or a leak at the line connection which would also get air in the system. Do you have the threaded cup for filling the system? If so, push some fluid up from the caliper until you get a level in the cup and then bleed it back to get the air out. Should get the lever range of motion back.
FYI, the instructions said to set up with the lever "in" for short reach and then adjust outwards if needed. I set my bike up to ride in the drops so I kept the short reach to two finger brake and shift.
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