The wheels should rotate freely. When pedal pressure is released the piston retracts slightly to allow the pads to move away from the disc; if the piston isn't moving freely or the caliper isn't sliding freely this may not be happening.
Piston retraction depends on the piston seals. These are square section & they actually grip the piston, so that when the piston moves under brake application there is no relative movement between piston & seal, just a slight deformation of the seal; when the pedal is released the seal's elasticity returns it to its original shape, thus retracting the piston. If piston movement is excessive there will be movement of the piston relative to the seal on brake application - that's how disc brakes auto-adjust.
If there is significant resistance anywhere in the system the brakes will drag. Possible causes are pads not free to move in the caliper, caliper pins not moving freely & piston not moving freely.
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