The heaters will indeed blow cold if you don't have enough coolant

Don't jump to HG failure just yet, my scorpion SS system smokes like a goodun when its cold too, often steams up the rear screen

? Mayo in the tank can be caused by lots of short journeys, take it for a 20 minute blast down a motorway see what that gives you.
Loads of places to loose coolant, first thing I would do is replace the tank cap with a new blue one from VW sounds like the seal has gone.? If the tank is still venting steam buy a new one!
Other things to check are the radiator, look for crusty green deposits down the rad and water on the cross member underneath.? Also the plastic flange on the right side of the block is prone to leaking, whip it off and replace with a nice new one from VW after cleaning the mounting area with some fine sandpaper.
Do you have carb problems when cold?? The coolant channel o'ring in the inlet manifold is prone to failure, and ends up blocked the flow of coolant, then often leads to a coolant leak at the back of the block causing smoke (coolant) to come off the exhaust manifold area.
Part 32 in the pic below:

The special tool needed to remove the driver downpipe, was an exhaust clamp with the clampy bit taken off and fitted outside of the nuts, then you just loosen the nuts till you can get the 'C' clamps off

Headgasket is a doddle, I had to do mine when I fitted my exhaust as one of the exhaust manifold studs had completely rusted into the head due to the coolant o'ring leak above, had to drill it out!? If non of the above tips sort your problem let me know and I'll give you the fool proof HG replacement procedure I used?
