Running temp/ smell inside car/ foam vent discharge

2003 Jetta TDI
I currently have 3 problems. Not sure if they're related...
First, I have a strong smell in the car. Not quite an exhaust smell, but probably not much difference between the the smell under the hood and in car for quite a while now.
Second, also has been happening for quite some time now. The heater/AC vents have been discharging tiny pieces of black/dark brown foam (maybe some type of insulation?) onto the dash, seats, and floor.
Third, I took a 100 mile trip yesterday. Not too far in I noticed the running temp was halfway between 190 and 260 and rising. To help I turned the heat on max, and that almost instantly lowered it and kept it at 190. The heat coming from the vents was extremely hot. I'm surprised it didn't melt the fins on the vents!
Any suggestions appreciated!!

You could have a compromised flex section in your exhaust downpipe...or a perforated post catalyst exhaust pipe.
The foam comes from the blend doors on the HVAC. You will need to fix it or your heater settings will be less than hot in the winter and your A/C will be less than cold in the summer.
See this thread:
http://forums.tdiclub.com/showthread.php?t=413341
Granted you are getting heat now but, your car is overheating! With a healthy cooling system the gauge should never get higher than the 190*F mark.

What does the coolant in the reservoir look like? Nice transparent pink or muddy orange/brown?

Looks like we have duplicate threads going on.

Yeah, I thought I lost the thread before I posted it, the I noticed there were 2!

Anyway, the coolant is transparent pink, and I haven't lost anything in my coolant level.