self-bleeding clutch? non-existent
Your hydraulic fluid is leaking out at the slave cyl / TO bearing
The TO is not developing pressure to disengage the clutch pressure plate
Unless the bleeder screw is not tight (unlikely, but might as well check), then the TO is leaking out the fluid, sucking in air, and not going to develop the pressure needed to depress the pressure plate diaphragm spring.
90% chance you will need to replace the slave/TO, and the clutch disk as well while you are in there, it likely got contaminated with fluid and if you are already paying the labor to drop the trans, do it.
2.3, home fabbed Mustang GT brakes, SVT suspension
67 Chevelle SS-496, owned since 1991