I'd say, like the others here, to check the pump timing. I too was nervous the first time I timed a pump: especially since the Bentley instructions are vauge at best. But's it's really easy. You' can't do any damage to the motor (short term) by adjusting the pump. What have you got to lose?
If the compression is good, then you haven't done any real damage to the motor. So, don't get down on yourself. Adjusting the pump and double checking the pump cam timing can't hurt, but putting ether into your motor CAN hurt. I'd strongly advise against it. I've pulled apart motors with 70k on them where the glow plugs died, and the owner was too cheap/lazy to replace them. They kept shooting ether into the motor until the rings cracked and the cylinders were all worn to sh*t. So, Steer clear of it. Once or twice won't do much damage, but if you keep doing it, it'll do damage.
As far as the pump timing, it's really easy. Here's a writeup on it I did a while back for 1.6. But's is the same for 1.9 IDI. The only difference might be the static timing value.
Here's a total rundown of the engine timing, and pump timing. If' you're positive that the all the engine timing is good, then just skip to the pump timin section.
ENGINE TIMING:
At this point, you should have the valve cover off, and the timing cover off too.
1) Turn the engine to TDC (the notch on the flywheel that's visible thru the trans inspection hole is up, and both cam lobes for cyl # 1 pointing up or away from the cam followers).
2) See if you can install the Injection Pump lock pin. If you do not have the correct tool, a deep socket with outer dimensions just large enough to fit thru the hole on the cam will do (I find a 10mm works well). It should lock the Injection Pump sprocket to the Injection Pump mounting bracket/motor mount bracket.
Be advised, the pump can be locked at TWO different positions: one at TDC on the pump, and one at 180 degrees off. There should be a notch on the BACK side (driver's side) of the injection pump sprocket. When the pump is at TDC, the notch should be pointing straight up, and should roughly line up with the reference mark on the mounting bracket (groove), and the reference mark on the pump casting (the raised spline on the centerline of the pump on the sprocket side of the pump).
If you cannot lock the Injection Pump sprocket with the bottom end set at TDC, then the pump is off a tooth or two. If you can lock the IP sprocket, but CANNOT see the timing mark on the back of the pump sprocket, then the pump is out 180 degrees (assuming the other timing marks are on).
But if you've never played with the timing belt, and the car was running before, then this should not be an issue. If it is off a tooth or two, you will need to reset the timing belt according to Bentley manual.
3) NOW, check the cam. With the bottom end at TDC, and the injection pump locked in it's correct position, look at the driver's end of the camshaft (in your case the foward end). The locking groove should be completely horizontal: parallel with the top edge of the head. If you would like to confirm it, then slip a cam lock plate into the groove. If you do not have the correct tool, a straight file will suffice.
If the cam groove is NOT horizontal (i.e. you cannot lock the cam), THEN AND ONLY THEN, will you need to adjust the cam sprocket. When the timing belt stretches the cam timing might be off a touch, but not enough to cause engine damage. If it is drastically off the mark, then you will need to adjust the camshaft sprocket.
IF you need to adjust the cam sprocket, this is the procedure.
Lock the camshaft with the cam plate or similar tool. Loosen the 19 mm cam bolt a few turns (yes, you can use the cam tool to hold the cam while you loosen the end bolt, so long as some idiot has not over-torqued it beyond specs).
With the bolt loosened a few turns (but not completely removed: this way the sprocket won't go flying off), tap the back-side of the cam sprocket with a rubber hammer (DO NOT USE A REGULAR HAMMER). ON MK 2 and MK 3 motors (like your AAZ), you will need to use a drift or a punch through a small hole in the metal timing back-cover. A few taps with the hammer should loosen it.
If the sprocket doesn't want to come by hitting the gear with a drift thru the hole, then completely remove the cam sprocket bolt, and kit the back of the timing cover (and consequently the cam gear) with a rubber hammer till it pops off.
At this point, the cam sprocket should spin freely. Now, tighten the cam sprocket bolt just enough so that the sprocket spins, but is not flopping around.
Go back and check your timing marks. The camshaft and injection pump should be locked at TDC, and the flywheel should be at TDC. If not, put them in their correct locations.
4) So, once all the timing marks are lined up (flywheel at TDC, Injection pump locked, cam locked with plate), you can now “Lock in” the timing setup.
IF YOU LOOSENED the timing belt tensioner during any of this, you will need to reset the tension. So, with the flywheel at TDC, and the cam plate locked (cam sprocket loose enough to spin), REMOVE THE INJECTION PUMP LOCK PIN. Then, rotate the timing belt tensioner clockwise until you can twist the timing belt no more than 45 degrees at the point between the cam sprocket and the injection pump sprocket. Do not assume that tighter is better. I find that it’s best to give all of 45-50 degrees and then no more. Over tightening can cause intermediate shaft bearing failure, oil pressure loss, and then a blown motor (seen it happen).
Once the belt tension is set, confirm that the bottom end is still at TDC (should be no problems there). Then, tighten the CAM BOLT and remove the cam lock plate. At this point, you should go thru the following checklist:
1) cam sprocket bolt is tight, and properly torqued (45 nM).
2) timing belt tension is properly set (45-50 degrees of twist).
3) timing belt tensioner is torqued to proper specs (45 nM ).
4) Flywheel is at TDC
5) Injection pump at TDC
6) cam lock plate removed
7) injection pump lock pin removed.
If that is all done, then you can rotate the motor clockwise 2 turns by hand with some resistance (compression). If you feel really strong resistance, then you’ve done something wrong and need to recheck what you’ve done.
PUMP TIMING:
Ok. That's the engine timing. Now if all that checks out, you can turn to injection pump timing. Generally, this involves removing the injector lines. So, be sure to do that first. Also, cover the injector inlets to prevent debris from falling in.
OK
1) Make sure the cold-start knob (choke) is pushed all the way in on your dash.
2) Make sure that NONE OF THE LOCKING TOOLS ARE IN PLACE, and then rotate the flywheel to TDC.
3) Install the adapter (VW TOOL 2066) onto the dial indicator
4) Thread the adapter into the injection pump via the center hole on the driver's side of the injection pump (the 12 mm bolt hole), with the dial indicator inside of it, but DO NOT lock the dial indicator into the adapter.
5) With the adapter threaded completely into the injection pump, push the dial indicator into the adapter until the small dial (lower left dial graded 0-5)) reads at least "3".
6) Tighten the adapter onto the dial indicator so that it is locked in place with the small dial still reading at least 3 (3 mm of preload).
7) "Zero" the gauge by loosening the small knob on the indicator (top right at 2 O’clock). Then rotate the dial face so that the needle is pointing to zero. Lock the dial face by tightening the little knob on the top right of the dial indicator. (Some people may question zeroing the tool at this point, but it makes getting back to TDC alot easier if you miss the flat spot on the pump cam).
8 Now, with NO engine parts locked (cam lock removed, IP lock removed), rotate the crankshaft counterclockwise with a hand tool (socket).
Rotate it SLOWLY. The needle on the dial should move counterclockwise.
The needle will rotate approximately 60-110% of a complete reverse revolution before it stops moving, despite the fact that you are still rotating the crank.
9) ONCE THE NEEDLE STOPS MOVING, you need to stop rotating the crank. If the needle stops moving, then starts up again, you will need to start all over. If you've rotated the crank a bit past the exact moment when the needle begins to stop, you're still ok to time the pump.
10) Once you've stopped rotating the crankshaft, and the needle has stopped moving, zero the dial indicator again (as you did in step 7 above).
11) Now, rotate the crankshaft pulley clockwise until the flywheel is at TDC.
The dial indicator should read about zero after making a complete revolution. This means that the timing is set to 1 mm according to Bentley. If it does not read 0, or you want to set the pump to a different setting, you will need to rotate the pump.
According to Bentley, your 1981 Jetta Diesel (assuming it has the original motor), should be set to .86 mm for standard setting, or .98 (1 mm) for improved performance (suggested if you have working AC). Check the Bentley for AAZ setting.
12) If you want/need to adjust the pump timing as per Bentley specs/personal choice, then you will need to loosen the 4 bolts on the injection pump. There are 3 on the sprocket side of the pump and one on the lower right of the pump on the bottom. (AAZ will just have the 3 bolts on the cam side).
To RETARD the timing (i.e. make the needle go counterclockwise), rotate the pump forward (away from the motor). To ADVANCE the timing, rotate the pump towards the engine. For minor adjustments, you should not need to loosen the injector lines. For large movement, you will need to loosen the injector lines.
13) Once you've achieved your desired timing setting, tighten all 4 bolts and double-check that the timing is still right. If it all checks out, then tighten the injector lines if you've loosened them. Remove the adapter and dial indicator. Reinstall the 12 mm bolt to the injection pump.
14) Make sure (again) that all locking tools have been removed. Rotate the motor 2 full turns again by hand, just to be certain that nothing is binding.
15) Reinstall the timing cover and inspection plug (flywheel).
16) Start your motor and go.
For those who do not have a dial indicator, or for the brave of heart, you can adjust the timing while the motor is running: with or without the dial indicator. I've done it before, and it's easier to find the sweet spot where the pump works best (i.e. the engine runs smoothest).
In order to do this, you'll need to have the car at operating temps, otherwise you'll advance the pump timing too much. After the car is at operating temp, you'll need to loosen all 4 IP bolts/nuts first, leaving one of them just snug (I usually leave the front one snug for easy access to loosen it at the correct moment). Then, start the motor with the choke lever pushed all the way in. Rotate the pump either way until you find (i.e hear) the optimum setting for idle/power/max RPM.
Be advised, if you've altered any of the original settings on your pump (i.e. max fuel screw, max RPM, idle, etc), you really shouldn't adjust your pump this way. The other settings will affect the engine's performance too much, and the timing can be way off, despite the fact that the car is running fine. Too much advance can do some damage in the long run.
SO, having said all that, it really sounds like your pump timing is off a tooth or two.