Classic lock barrel tab has broken off problem. If you take the steering column apart you will likely find something similar to the pictures in this thread:
http://forums.vwvortex.com/showthread.php?4671444-HOWTO-replace-mk4-ignition-lock-cylinder
where I stole this picture:
It is possible to start the car after taking the steering column apart:
1. first put the key in (even if it just spins, it still should unlock the steering wheel and also the radio frequency immobilizer chip needs to be read).
2. put a screw driver in the white plastic switch and turn it
Now that the car runs you have three options:
1. fix it properly (I don't recommend this) by replacing the broken "ignition lock barrel assembly", it is the largest part which holds the switch on the left and the key cylinder on the right. It is riveted to the steering column. Here is a great video of how the ignition lock barrel assembly and how the ignition switch comes out:
https://www.youtube.com/watch?v=5Bl3mdzLaYc ... this option costs hundreds of dollars.
2. rig up a push button ignition (see the link in my signature)
3. spend zero dollars, leave the plastic covers off the steering column, and just start the car with a screwdriver from now on.