Bleeding brakes

I have a 2010 tacomaI just put new pads on the front.Had to crack the bleeder to install.Now im trying to bleed the system and get get it done.Feels like a firm pedal when engine is off but when started it will sink to the floor.I read in one article the key needs to be in on position another article says no leave it off.
When I got my son to pump the brakes while I was bleeding them there is no air coming out.All clean fluid.All wheels are clean fluid coming out.
There was a good braking before the pads were installed .Pedal was firm so I don't think there is anything wrong with master cylinder.
Can anyone help me here?

 

I don't know if Toyotas are different, but I never do anything with the switch when bleeding. I usually use a power bleeder at work though. I assume he is holding the pedal while you crack the bleeder, and then you tighten it up before he releases? Usually the pedal is a little spongy and can sink a bit more than usual until it has been driven to seat the pads, but I shouldn't go to the floor. If all the pistons are touching the pads, and the pads are right up against the rotor, there has to be air if the pedal goes to the floor and they were working before. Did you have the bleeder cracked just long enough to push the pistons in? One possibility is that while bleeding the brakes, the pedal was pushed farther than it's normal travel, which could damage the seals in the master cylinder.

 

Key on or off is relevant for newer (09+, I think) TRD OR 4x4 models that have master cylinders equipped with a pump to boost line pressure. The pump will push fluid to an open bleeder as long as the brake pedal is pressed (not pumped), and you don't let the master cylinder run dry.