that seal just stops oil leaking out from around the cable 
i would say this problem could be either poor quality part, box oil is overfilled or the box breathers are blocked. the oil should be level with the filler plug on the end of the box near the green cap. there are 2 breathers, one on top with a plastic cap and another at the front above the massive hex plug behind the clutch cable. its a small slot machined into the housing, tricky to see it
Thanks very much rubjonny.
Assuming that the breather
is clogged, I was wondering whether the act of unblocking would necessarily deliver the solution without also replacing the cable. My reasoning here is that, even with the pressures reduced, the cable being "loaded" with gearbox oil will mean capillary action taking over and the problem will remain.
I've pretty much decided to try to step back from this and go back in with replacement parts where I can: speedo cable, speedo drive, breather sleeve and cap. I will also make sure that the gearbox oil is at the right level and that the vent behind the clutch cable is free.
The parts that I have on order are:
Cable: 192 957 803 B (ex Heritage - you can only get the LHD part via VW classic parts which is 191 957 803 B, I nearly made that mistake :embarassed:)
Speedo drive: (ex GPC I reckon it's the white one that I need for my 140mph clock, but got I also ordered a red one just in case)
Breather cap: 014 301 485 (what the heck - they are pennies)
Breather sleeve: 012 301 474 A (ditto).
Speaking to the parts department at a VAG dealership, we noticed another part that
may come into play - an "O" ring (part number 001 301 131). I'm not sure whether this will help or not, but for the pence they cost, I thought there would be no harm in acquiring one. Apparently the assembly explosion does not clearly depict where this "O" ring sits - or whether it will help to suppress the migration of oil. If not it may be the case that a serious clump of grease at the gearbox end of the cable (or indeed at the other end) may be needed to act as a barrier preventing oil from getting in?
