I would think the place to start is to get the proper type fluid in and the old stuff flushed out. I know the 88-94 7-series cars use a special fluid, Pentosin. The cap for the power steering should tell you the proper fluid to use.
I found this quote about "brake bombs" while searching the archives of
www.roadfly.com, "...the infamous Brake Booster (Bomb) problem. If the brake pedal feels rock hard and no braking apparent without releasing and reapplying the brakes, I would say the bomb is defective."