You are describing the coolant flange. This is a fairly common failure. Replace the flange, don't just try to replace the o-ring seal. The part number for the 2.0 is 06A121132C, for the 1.8T is 06A121132AQ. You should be able to pick up at the dealer for around $25.00.
I carry them in stock for less than $15.00.
- Craig
Discount Volkswagen Parts