I have sticky'd this thread to the MKIII forum as it is a rather common issue with the VW engines when it's not driven enough to burn the moisture out.
I thought I would share these with everyone. I got a scare today when doing an overdue checkup on my Golf. I found the oil cap had a whitish sludge inside. I immediately thought oh Sh*t, my new head gasket is going bad. I checked the dipstick and didn't see any "chocolate milk" consistency on the stick itself.
After doing a little reading, I found out that driving short distances in cold weather causes moisture in the crankcase to collect and form on the top of the engine (where the oil cap is). This leads to the false reading that coolant is mixing with the oil.
After driving on the highway for a couple hours (round trip from Groton CT to Newport RI), I cleared out the sludge and got the following result:
Mike