if youve fitted a new thermostat and the water is circulating, it points to the water pump, what model mk4 golf is it you have?? the 1800cc 20v engines are prone to water pump failure as the plastic impellor breaks down with age, sounds like this could be your problem, there about ?35 on an exchange basis at vw, but unless your any good at DIY i wouldnt attempt it...........
kid