fixed leak! Thanks to my pal, Mike!
We got the leak fixed. Purchased the o-ring at the point of occurrence (leak), the O-ring for the coolant flange, and two copper (crush) washers for the oil line terminal end. Just under $10 @ Dick Hannah VW in NE Portland. Make sure you have at least one bottle (1-2 qts) of pink coolant (PentoFrost SF). Timewise, it took ~3 hours for us to make this repair. Lessons learned: 1) Throw some old rags down under the car (or something absorbant). You don't actually drain all of the coolant out initially. I would guess 16-32 oz came out once we finally pulled the coolant pipe out to replace the O-ring. But, it's probably a moot point. When you do this type of repair, you will have some mess to clean up. 2) When refilling the coolant back into the car, top the expansion tank off and make sure you have extra DI water and coolant in your trunk. I got the overheat alarm since I didn't put enough back in initially. 3) Another moot point for most of you pros, but make sure you have a grab tool (magnetic preferred). We dropped tools, bolts, etc. down in the engine.
Now, I have a 'check engine' light and flashing glow plug light on my dash to remedy. I imagine that one of the plugs didn't get completely connected to the manifold/cover. We checked the glow plugs; all have connectivity.
Thanks again to everyone who posted on this thread. It really helped. Thanks especially to CattleRepairMan, ParaMedix, MOGolf, and JETaah for specific instuctions!
-ac