Geo

It may have worked it's way up to the valve stem seals and softened them up temporarily. You can actually get an oil treatment designed to do that but it rarely works. Still might be worth a try though given the cost of a head overhaul and engine rebuild

I'd stick with the G60 box if possible as it's ratios are suited to the torquey nature of the engine whereas the 16V box would have ratios to suit the revvy nature of the 16V engine. You will have better acceleration away from the lights but noisier and less economical cruising and slower top speed I would think.

Which is only 600 miles per litre.....i.e. a serious problem. K Exactly but in the owners manual VW say anthing up to this is "normal" But you are right, I would consider that to be an indication that something is seriously wrong! I used to have an old mk2 golf diesel with the engine knackered in it and it still didn't use that much oil!

You can check this pretty easily. Get someone to sit in the car while you look under the bonnet Get them to engage first gear and hold their foot on the brake. Then bring the clutch up to it's biting point just for a second to "rock" the engine ( be careful though, dont let the clutch slip) Try it in reverse also. You should be able to see if the engine is moving around on it's mounts. A little movement is normal but if it's pulling the airbox around then something is wrong.

It's looking bad for the engine if it's losing that much oil. VW say up to 1L per 1000km is "normal" but a healthy engine shouldn't use anything like that much once it's run in. As the guys say it's more than likely to be valve stem seals and/or piston rings + bore wear. Probably the first one since the car has low mileage. Low mileage cars are in some ways more likely to suffer this problem as the seals tend to go hard from lack of use and contaminated oil which has been left in the car too long. (as I'm sure you know oil should be changed at least once a year regardless of mileage) ps: If it is bore wear there would be other symptoms such as the car being hard to start when hot. Also, when the engine is at normal operating temperature, take off the oil filler cap. If there are puffs of what looks like steam coming out then the rings and bores are worn too much.