[Sid Squid]

The reason that the brake is dragging is most likely the reason you can't get the pad out, the pins that pass through the rubber gaiters are seized, if you could compress the caliper bracket tight up against the caliper itself, (that is, the rubber gaiters compressed to their minimum length), then you would be able to remove the pad from it's pins, when you've done that, pump the piston out a little and clean it.
When reassembling it, the pins that pass through the rubber gaiters must not be lubricated with ordinary moly or copper grease, you must use grease which is suitable for rubber*, most other grease will damage the rubbers, make them swell and seize the pins again, it's also a far better grease to use when reassembling the hydraulics as well, much better than getting corrosive brake fluid everywhere.

* Castrol Girling Rubber grease, for example. Doesn't cost much and the sparing amounts required means that a tin will last you your entire life. Halfwits etc sell it.