Hi on the dual circuit brake master cylinder if you take the brake fail switch out should fluid come out?

No, it shouldn't - but I'm not surprised it does. Most of those switches have seized and the rubber gone brittle, so they don't work.

The way they are supposed to work is that if there is more pressure on one circuit than the other, the plunger will move and touch the probe that screws in. This competes the circuit and the light turns on.