Looks like it needs new pads definitely.
There's a tool used to push the cylinders apart.
from my experience, there are a couple of things you could try.
1. push the pistons out and clean them one by one. To do this take the pads out, wheel out, and all, take a tire lever or something to keep one of the pistons in place, and then pump the lever until the piston starts to pop out. I don't recommend taking to piston all the way out so be careful as to how much you push out. But take some rubbing alcohol on a q tip and wipe down the piston, and then take some dot fluid (I think avid is dot, if not use mineral oil) on a q tip and re-lubricate the piston. repeat for the other side.
2. take some fluid out of the line. in this instance there might just be simply too much fluid. In this case, I assume you bleed the brakes properly. So what you will do here is put the pads and wheel back on the bike to start. there should be a bleed port on the caliper itself, so prepare to let a bit of fluid out, but put a towel around is as to not contaminate the rotor or pads. loosen the bleed port just a little bit while squeezing the brake ever so slightly. as soon as you see some fluid come out, DO NOT LET GO OF THE LEVER but screw the bleed port back in. at this point you can pump the brake back up and the pads should have moved out a bit. you may need to repeat this process again a few times but if you just keep letting fluid out and it doesn't get better to the point where the brakes just rub and don't engage we have a problem.
3. If the earlier two solutions did not work then it becomes more trouble than it is worth. There is most likely a gasket, o-ring, or seal that has gone bad due to the corrosive properties of old dot fluid. At this point, it is much easier just to get new brakes. this generation of avid juicys might not even be able to be taken apart that much.
Just get new brakes if those didn't work. or take it to a bike shop.
4. New bike day!
"Steel is real."
- IDK, some guy.