I have seen a few cars over the years that when the head gasket goes(on the water jacket side) the exhaust system fills with water and the exhaust steams like a bugger for a few weeks after until all the water has been burnt/steamed out of the system. Has the car recently had a head gasket? The oily/wet looking plugs suggest this TBH. Also the state of the coolant leads me to think the head gasket has been done recently. Also if you mix G11 with G12 coolant it turns that nasty colour of brown and looses its properties!!! They should never be mixed!!!!!!!!!!
Fuly flush the water system out and fill with G12. Id also flush the oil out and fill with quantum synta silver semi synth oil from the dealer or GSF. Not much price differance TBH and you get a nice VAG receipt from the dealers to add to your service history.
Stu