I had a 94 Ranger 2.3 2wd that had a very similar problem.
I found the cause to be two things:
The master cylinder was leaking internally, and externally, but the external leak was from where the pushrod enters it, where the master cylinder bolted to the brake booster. Both of these leaks can be hard to detect because fluid won't escape where you can see it... but I had very similar symptoms. One really crude way to guess if your master cylinder is bad is to look at the brake booster painted surface below where the master cylinder bolts to it. Is the paint really nasty, is there corrosion? Brake fluid is very bad for paint and often by nature of slowly bleeding out there over time, the booster will look terrible at that connection. I got a new master cylinder at O'Reilly auto for $40. Its not hard to bench bleed, especially if you get a bleeder kit (little plastic nipples and straws basically). Made a huge difference.
The new master cylinder lent to the next problem!! The second problem was that the 2 wheel abs unit (which is mounted on the drivers side frame rail, forward of the fuel filter maybe 6-8", a little aluminum unit with brake lines and an electrical connector to it) was leaking out of itself (not from the lines entering it and leaving it). This seem to have deteriorated at an accelerated rate after replacing the master, maybe because of better fluid pressure. That's a speculation in my case, but the leaking ABS unit got much worse after doing the master
Both of these things caused the pedal to do weird stuff. Namely, the pedal felt good for a brief moment, then got a little squishy like you describe.
I would consider doing the master cylinder but also check the ABS hydraulic unit.
The annoying part about the ABS hydraulic unit is that pre OBDII trucks require obsolete, expensive tools to bleed a new hydraulic unit (the unit is $100-130 and the tools could rack you up $300). Or you could put a new one in and try locking up the brakes over and over on a gravel or dirt road, since you need the ABS hydraulic unit(which is a valve) energized/activated to bleed it out. Then you have to go home and bleed the brakes normally, repeat until brakes feel normal.
Theoretically an OBDII truck (1996 model year +) would be easier since OBDII is still standard.
Lastly, the ABS light staying on means that you have a problem with ABS and that it is not functioning. If I am remembering correctly, any ABS system problem will throw the light on and prevent ABS from activating until the problem is remedied.
The parking brake light and brake 'idiot light' on my 94 were shared, and what normally threw the idiot light on was from having a low fluid level in the master (there is a sensor to check that).
Hope someone else can shed more light or affirm what I'm saying. The leak at the ABS hydraulic unit is easy to miss since its hidden on the frame rail in a spot that is normally oily and gross anyway.
Have someone press the brakes for you while you are under the truck running in Neutral (safety first, chock wheels and set e brake) and see if you can see a slow leak out of the ABS hydraulic unit. I saw mine.
Edit: You say the problem is random. You should see if light vs hard braking affects it consistently. My pedal didn't feel bad under light or normal braking (granted I'm very light on the pedal and tend to mostly downshift and coast) but under a heavier foot... the squish was always there.
Edit: If you can't afford a new ABS hydraulic unit or the special tools to bleed it, and you don't care about ABS working, (supposing your hydraulic unit is shot and leaking), you can always bypass it by connecting the line going in to the unit to the line going out, with a threaded coupler. Don't even need extra line. I've done it. I'm not saying its a great solution because I like ABS, but it will work and is a $5 fix. You could lock that truck up on a dime after. If you just leave the ABS hydraulic unit plugged in with its electrical connector after bypassing it, it will not keep an ABS light on because it thinks the ABS is still connected. Again not telling you to do it, but I did it and the brakes worked great- you just have a non-ABS system after.
Edit: On the 'bouncing back and forth' bucking stuff you describe; I'm assuming your truck is a manual transmission? I'm sure you know this but at a certain point of braking without the clutch pedal in, you begin to cause a fight between the truck being in gear and still wanting to move, and the brakes trying to stop it. My 94 had crazy steep gears from the factory, like 3.55 or something kind of inappropriate for an underpowered truck, and it was really easy to make the truck buck if you were using the brakes, clutch out, in gear, at low rpms. Hope that makes sense.
Chris
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