XX brakes - help needed

hi all,
i was just riding along when suddenly.... just kidding. in fact i was just replacing the pads in my rear brake today (which i've done lot's of times before).
so, i put the bleed block in to retract the pistons into the calliper, then put the pads in and noticed that they were much closer together than on previous pad swaps. i could hardly get the wheel in.
so i turned the contact point adjustment out a little and that opened the brake up a little but still not enough for the wheel to spin freely.
strange thing is that until today i thought the CP adjuster had nothing to do with the position of the pads.
anyway, as this improved the situation i thought i'd give it a couple more turns (it wasn't at the limit yet). however on the next quarter turn the CP adjuster with hose and everything came loose and fluid was leaking out.
i screwed it back in straight away, however it is very loose at the connection to the lever and there is visible movement when pulling the lever.
anyone come across this problem before?
thinking of taking the whole brake to the LBS and have them send it to SRAM for checking and an overhaul. somehow think that a normal bleed isn't going to fix this.
thanks