On MK2s with an electric fuel pump (i.e. GTIs), when you switch the ignition on the fuel pump should be heard to run for a few seconds, then stop, to 'prime' the system
This wont affect the fuel guage, its slow to come up to the final reading after you first switch the car on anyway.
If yours goes up then down it might suggest you have an earthing problem at the in tank lift pump/level sender plug or next to the fusebox
