It is definitely the MC. The reason is that your MC was already on its way out. Now that you've effectively increased the surface area of the calipers' pistons, the MC has a lot of backpressure on it. This in turn allowed fluid to seep past already worn MC piston seals. This also tends to be an issue in the colder months as the seals constrict, and it's easier for the hydraulics to start to leak.
The reason your friends' works fine is that his MC wasn't as worn as yours. I recommend replacing your MC with a Z32 MC (whether it is a 1" or 16/15"). The reasons are due to over pressurization of the hydraulic system. The smaller diameter S13 MC exerts too much force on the surface area of the pistons of the Z32 calipers. It's designed to push on 2 pistons of X diameter, not 4 pistons of Y diameter.
I used an S13 cylinder for 2 years on my Z brakes, and locked the brakes up too often. Once I switched over to a Z MC, the braking system felt more balanced, and I no longer locked my brakes up, allowing for quicker stopping times (and I don't plow into road cones in auto cross due to locked brakes anymore).
Dave Coleman wrote:The diameter of the master cylinder determines both how much brake force you'll get for a given pedal effort, and how much pedal movement there will be. The stock 7/8-inch master cylinder has a piston area of 0.60 square inches, so 100 pounds of force shoving on the piston from the combined effort of your foot, the pedal lever ratio and the brake booster, will make 167 psi (100 lb/0.60 in2) of fluid pressure with which to squeeze the calipers. Moving to a 1-inch master cylinder gets you 0.79 square inches, which makes only 127 psi from the same 100 pounds of footwork.
Since we had complained that the brakes felt touchy and overboosted, this reduction in pressure would be exactly what we needed. We also complained that there was too much pedal movement. The bigger master cylinder helps here, too. A 7/8-inch cylinder moving 0.1 inches pumps .060 cubic inches of fluid to the brakes. A 1-inch cylinder would pump .079 cubic inches. That means it would take less pedal movement to move the brake pads the fraction of an inch from their resting position to the rotors.
Here's a bit from an old article Dave Coleman wrote. It should help put things in perspective.