hey mate,
as mollins has said - timing belt is a good idea but be CAREFUL and do it right. buy a manual (the internet is your friend) and ensure you know what your doing (there is NO leeway for error in the cam/piston timing in the 1.5 diesel).
the 1.5 IDI will run on pretty much anything as long as its warmed up enough. i ran my old one successfully for over 6 months on some very poor quality bio (rejected from a council depot) and it never missed a beat. but as stated, install a couple of $4.00 filters before your big diesel fuel filter and always keep a couple of spares in the glove box.
use a good oil (i too use penrite) but DO NOT use anyhting lighter than 15W-40 since you'll probably just burn it up. Penrite make a non synthetic version of the HPR diesel range that is 20W-60 and works really really nicely in the early non-turbo vw diesels.
have fun with it, good luck.
BTW - dont baby it around too much, give the rings a work out and the engine will keep thanking you year after year.
Oh - and on your exhaust question - it will help (but its a little noisy
) and so will openeing up the intake. you should have no trouble mounting it up.
'07 Touareg V6 TDI with air suspension
'98 Mk3 Cabriolet 2.0 8V
'99 A4 Quattro 1.8T
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