This weekend my sapph 4x4 actually developed a problem with the ABS valve block. In your case it could also be caused by that. Some valves in the valve block can actually direct the fluid back to the reservoir, so if those valves are open (which they normally shouldn't be) you will not get fluid pressure at the calipers.

Do your brakes actually work, but it is the pedal spongy? In that case I think there will still be air in the system.