it more than likely is just the pcv valve....replace it and see what happens....if the pcv valve is clogged up enough that its not allowing the engine to properly ventilate it will accumulate moisture inside the engine which this is obviously doing. i am new to vw's but i have worked in enough shops to know that this is a common problem. i would say about %75 of all mk2 and mk3 vw's i have seen have had moisture in the oil cap or on the dip stick due to moisture build up. The blowby vapors that end up in an engine's crankcase contain moisture as well as combustion byproducts and unburned fuel vapors. The crankcase is sealed to prevent the escape of these gases into the atmosphere, but the vapors must be removed to prevent oil contamination that leads to sludge formation. The positive crankcase ventilation (PCV) system siphons these vapors from the crankcase and routes them into the intake manifold so they can be reburned in the engine.
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