Congrats on the purchase – it sounds like it was a good runner before you got a hold of it. If the car is spewing coolant as you say, you may want to ensure that it didn't overheat at some point. My first order of business would be to have the mechanic do a leakdown test to ensure that there is no head gasket leak. If there appears to be an issue with compression or head gasket issues, I would say run, far away from the car.
A water pump is a straightforward fix, however, removal of the timing belt is effectively required for its replacement. The timing belt and its associated rollers and tensioner should be replaced when you acquire a new TDI, unless you have explicit paperwork that it was done at a specific mileage and date. It makes sense to replace the other belts at the same time as well, since a separate belt drives the water pump/power steering and you don't want that one to snap. Interval on the belts is 60,000 miles, but I replace them after they age out after 5 years, regardless of mileage.
Now, whether a shop is familiar with the timing belt procedure on the AHU and has the proper tools to do the job on a 25-year old car is a whole 'nother can of worms. The issue with these old cars is that they quickly mechanically total themselves, not solely from the cost of the parts, but from the labor required to do the work. There is a lack of skilled technicians that have worked with TDIs of this vintage, as there just weren't that many made/imported to USA.
I'm not trying to scare you off from owning this car, but know what you're getting into – the only reason I own this car is because I think these are some of the most reliable and well-built VWs ever made. There are plenty who will disagree (rust is an issue) – but having owned a Mk4 (1999-2005) era car, I can safely say that these older ones have far fewer electrical / chassis issues than the Mk4 cars, believe it or not.
As for delving into fixing other issues or refreshing other aspects of the car, I guess it depends on how much you like it. If you are just in a VW because you got it for cheap... well... I would get a different car, quickly.
There are resources all over this forum for the B4 Passat. The forum is not as busy as it used to be as many owners have moved on to newer cars. I have not owned a B4 Passat, just a Jetta. The Passats have issues with the speedometer / cluster going bad and the door handles, as you have noticed. There are fixes... just perform a search. Mechanically, the engines are very similar between the A3 (Jetta) and B4 (Passat).