I would suggest getting a mighty vac bleeder, available at Sears around $30.00. Just pull the cap off the master cylinder and hook the vac to the bleeder line and suck her dry, then fill the cylinder 1 0r 2 more times and repeat to flush all that old crap out of there. Next I would look real good at your seals on the master cylinder cover and replace if necessary.
As for the floppiness, possibly the plunger is screwed up, or the seal is torn? Might want to find a used master cylinder.