Thanks for the reply kniterider, I've now checked some other sites, and the coolant level 'bleep' seems to becoming a common fault! luckily a replacement expansion tank that includes the level sensor only costs around ?15, although to me this seems very cheap for a genuine part!
I think that replacing the temp sensor is probably the best course of action regarding the problem with the temp guage, I just hope it fixes it! I will post my findings in due course!
Looks like I will starting 2004 with lots of car work, my Dads GTi, then a new exhaust for the wifes Lupo, a full brake service for the mk2, and of course I will have to clean the TDi in case it feels left out!