JD, Question #1 If you do not get all the fittings taped or tight or puttied air will get in. The Closed return can eventually produce enough air into the system that you only have a foam in the pump rather than fuel. I had that trouble yesterday and had to take it off veg oil back to diesel and then I could continue on my way. I tried it again after the car sat all day and I got 10 miles down the road and it was starting to power down, and sputter so I put it back to diesel and will source the air leak again this weekend. The triple whammy is once air gets in you are recirculating it with the closed loop rather than dumping the air back into your second tank. That is an option but it takes a third three way solenoid to do it. Or one of those 6 way valves that fall apart after a short while. I am using well built valves that have big openings and no flow restrictions.
Question #2 I do not use an extra pump. Why not? Did VW throw one on there in 1981? No it is a drawn to the pump system not a push to the pump system. The solenoids I use are not designed to have fuel pushed at them anyway. No how does deal with the thicker fuel being drawn to the pump? You have to heat it in the tank. Several ways to do that I am sure you are researching that. I purchased an aluminum tank, with baffles and an aluminum tube at the bottom for coolant. All professionally welded. Expensive compared to the five gallon plastic diesel jug I have seen some try to use but I think it is necessary.
My oil is heated to whatever number of degrees I want to let it go to but I can shut the heat off to the tank at any time. My heat system is split from the engine, it is separate by using a FPHE (Flat Plate Heat Exchanger, for the non WVO crowd) a 12 vdc oil pump and standard coolant lines. I did not go the hose in the hose route only because the guy I bought my tank from also sold me all the hoses he had that went with it. I think Pex tubing inside a 5/8 inch line would do well in a Rabbit. My son did copper tube inside the coolant line and fabricated the hose bib and compression fitting combination to make it work and not leak.
I heat the oil in the tank to 85 degrees, draw it through a 3/8ths inch diameter line to a 10 micron filter that has one of those VW oil coolers between the filter and the flange. I use it in reverse to heat the oil not take heat away. From there the warmed oil goes to a Racor 2mm filter with a water separator, dropping down to the FPHE that is just before the pump and solenoid valves.
I will run my tee from the return to tank or loop solenoid to the line just before the FPHE this weekend as I think there is to much vibration at the pump area and I am getting air in there. That will also increase the temperature of the incoming fuel and not blend it with what was just in the pump and cooled down.
If you need more information and pictures give me a PM and I will share. I should do a build thread but I need to rebuild the head, fix a washing machine and work on the house this weekend for starters.
later DAS