I loosened the brake cable at some point, but not sure if I did all the right things at the same time. For example, when I loosened the mounting bolts to slide the caliper over, I don't remember if the cable was still loosened or whether I had tightened it again. The bike is at the buyer's currently, so I won't get to try anything until Mon or Tues.

But thx everyone, I learned a lot in a short period of time, and have a few things to try. My usual heuristic approach to wrenching did not work this time, but between Tekro's install notes, youtube and bikeforums, I think I've got a much better handle on things.

Btw, these 25 min bikes do NOT come with assembly instructions (there's very little to go wrong), just a generic bike manual that does not even cover disc brakes.