1:
xenon or HIDs are basically a different type of bulb to halogen, instead of a piece of wire being heated inside a gas filled bulb, the electricity arcs between two points to create a light.
its a different bulb, different headlight unit as well as the auxiliary bits that go with it.
2:
doubt it, as you would need a suitable unit that would fit a mk1, and seen as xenons have only been around (for cars) since 91 the mk1 is probably too old.
3:
to retro fit a MK4 you're looking at around £1000, so assuming you could find a cluster about that.
4:
you would need, the bulbs, unit, a lamp cleaning system, and an auto levelling system (adjusts the angle based on weight in the car)
your best bet is to get some uprated bulbs for that xenon looks as i doubt you could do it legally on a MK1, unless you can convince hella to make a cluster for you