I look forward to reading more about this car. I'm quite a fan of the smaller Volkswagens, especially the Polo. In a strange, slightly perverse way for a car enthusiast like myself, one of the cars I've driven that most sticks in my mind was a Seat Cordoba (essentially a Polo Mk3 saloon) with the 1.9 TDI engine. It was only a brief test drive, and of course the engine was turbocharged which yours isn't, but I really enjoyed it. Effortless pull from low revs, a nice gruff engine note and the potential for over 60mpg, according to manufacturers figures.
It had so many other qualities though too. Not least, that it felt so well put together, like it would happily cover hundreds of thousands of miles with no bother.
The Polo of that age, and the equivalent Seats, are proper economy bargains. The one I drove was up for only £1500.