When did the car last have its oil changed. Are you sure it was full 700km ago?
In the service manual it states the car burns around 1L of oil per 1000km.
I found the 1.6L to be very reliable, I took ours to 210,000k before selling it. The engine was the best thing about it.
I also recommend using 98 octane fuel. It might sound rediculous, but from when I owned our 1.6L. The car was woeful on anything but 98.
I wouldn't give up on it just yet, take it to a VW mechanic and have it scanned for errors with vagcom.
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