if the guy wasnt holding the revs at 2.25k rpm it wasn't done right, not many mechanics know how to do this! It should still run if set at TDC though, just slow n crap! 1st thing I'd do is buy a new blue temp sender from VW, this can cause the non-starting issues you mention and could make it smoke a bit I guess if the readings were far enough out to make the mixture really bad!
Generally VWs dont just blow the head gasket for no reason, if the car was allowed to overheat that would do it though.