[cleanspeed1]

Does the gauge go back to cold or normal after the engine starts or does it stay there? Given the age of the vehicle, there is going to be considerable corrosion and even sender units and other electrical components ( wiring, switches, etc. ) are going to need looking after. Grounds need to be cleaned up or repaired.

The speedometer not working may come down to a cable that needs to be replaced.

Go test all the components in the circuit and verify operation of the cooling fan, that the wiring is OK and routed properly, that the coolant temp sensor is fine, and any protections like fuses and relays are ok and replace as necessary.

These diesel engines are called "interference" style engines, so in the event of a timing belt failure, the valves will hit the pistons and damage will result ( read very expensive ), so you must do a timing belt service as soon as possible.

Diesels need clean fuel and clean oil, so change the oil and filter, along with the fuel filter. You cannot let water mix with the fuel, so when you fill up, go to a truck stop that has a lot of traffic. The fuel will be fresher. Use a quality treatment in each fillup like Service Power Diesel Kleen with Cetane Boost.

There are plenty of books about engines and VWs, so you need to study. They are not complicated. Just do what is recommended, and they will go a very long time before needing an overhaul.