Is the pedal sinking on its own, or only when your applying pressure? Are there any visual leaks? A faulty master cylinder will allow the pedal to drop slowly without an increase in pressure from the operator. Once power assist is provided this will become more pronounced. With engine off pump brakes until all assist is exhausted, then stand on the pedal hard. If it holds your master cylinder is good. If it slowly falls and there are no visual leaks the master cylinder is bad.

 

The pedal is supposed to sink when you start the motor. That's the assist working. Ok so I'm not familiar with diesels but I figure the brakes work the same. I understand the need for the vacuum pump, but is the master cylinder connected to the same style booster as a gas motor. If so it sounds like the valving in the booster is allowing assist when it shouldn't be.