What year is your 16v. Mine is a 1995 with an OBD2 port (On Board Diagnostics I think). This looks a bit like a small scart plug. The code reader says that it works on up to 1996 Gti's, but this isn't true. I bought one and tried, it didn't work. The code reader from Halfords works with OBD1 cars, which is up to 1994. The OBD1 connection is three seperate 3-pinned connectors.
My port is to the left of the ashtray as most other people seem to say. I've heard it can also be in either one of the footwells.
If you've got a '95 you're best bet is to download VAG COM (free) and buy an OBD2 PC connector from Ebay. I got one for ?37, but there are cheaper ones.
Have a look here:
http://www.sjmautotechnik.com/VAGCOMbuy.htmAbout half way down there is a picture of the OBD2 connection.
People, please feel free to correct me, because I've only learnt about this in the last week.
Kris