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Fact is, for a 2001 car, taking it to a dealer is just asking for trouble-they saw you coming, and too advantage of it. You might consult with an attorney, but the fact of the matter is you decided to allow them to 'diagnose' it and then took it to another facility for repair. That it took them 4 hours to incorrectly diagnose says it all-unless a car is under warranty, taking a vehicle to a dealer is a huge waste of money.
Get a compression test done-it might reveal a blown head gasket or worse, damage to the mating surfaces of the engine and head(s)-I think the repair facility who actually did the repairs bought into the bad diagnosis, so appeal to their professionalism-have them do the compression test and a pressure test to the cooling system to determine the extent of the damage. Finally, your car is 10 years old-the dealer should have done right by you, but more often than not, the abuse people who drive older cars because of the years of attachment and the possibility of a huge bill.
VW have a big problem with their plastic water pump so I would first make sure if the radiator fan is working, the thermostat is in good order and radiator cap is good if all these things are in order and if the vehicle still heats up then look into the head gasket issue.
If you haven't replaced your water pump (composite impeller) to an aftermarket (metal impeller) then your heating problem lies in there. VW uses a plastic type impeller which cracks at the shaft connected to the pulley that drives it. When that happens, it might spin slower than engine speed or not at all. This will be a good time to do a timing belt service because it has to be removed out of the way in order to get to the water pump housing, so keep that in mind. Water pumps range from $69.95 - $89.95 from most VW internet shops that also offer free ground shipping.
you have to remove thermostat housing from under water pump to get to thermostat.you also need a haynes or chilton repair manuals.it will make job easy.finding and locating parts of the car.
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