That's pretty common on old VW 020 transmissions. It's especially noticeable when it's cold outside (below about 5-10 C). You can try GM's Syncromesh fluid in the transmission to try to smooth it out, but if you are getting grinding at both upshift AND downshift, I'd say your sychronizer for 2nd gear is pretty bad. Usually, you'll only get grinding on the upshift, and only when the car is cold. Once it warms up, the grinding should go away. If not, you may have to tear into/replace your trans.