It would have been too expensive. The original Beetle's best feature was its ultra low cost, and simplicity. Gasoline was cheap then, too. So if you were driving a car that already got 35 MPG (earlier versions, anyways) and cost about $1500 to purchase brand spanking new, it would not have made any economical sense to make a more expensive diesel version that may have only been able to get 40 MPG with the technology of the time.
Mercedes did, but they were much more expensive cars, and the diesel engine added even more cost, and their driveability (compared to gassers at the time) was awful.
Even today, even in Germany, Volkswagen's most popular car, and the sort of indirect descendant of the Beetle, the Golf, only sells about 50% diesel. And I would wager to say that of that 50% that chooses one of the diesel engine options they have, not all of them ever will recoup that added cost over the time they own the car.