Tapping noise can be injectors but they don't normally get quieter as oil warms up.
My money would be on the hydro cam followers, stem seals are prone to go with cars this age (in particular if cheap oil was used and oil change intervals were streched). Relatively easy to replace but cam needs to come out for followers. Stem seals are a bit fiddly but with pressure adapter in spark plug hole can be done without head off.
Well at least on a mk3 above is true...... thought I was in mk3 section
Mk4 2.0 may just burn oil anyway. They are more prone to do that than the old 2.0 type 827 engines in the mk3.