Time for a Spring update. It sat all winter, then this spring I timed the engine again and adjusted the pump bracket so that the belt would track straight. I'm set to 0.95mm right now with the pump. I installed a weighted shift rod, new bushings, and a short-throw shift kit from "missing linkz".
No pictures of that, but it improved the driving experience.
I installed the upper radiator mounting bracket from a 1g Dodge Neon, it's perfect in the mk1, all I had to do was drill a hole and install a rivnut. I'll figure out something for the other side of the radiator to reduce potential damage from vibrations, but for now, this is great.

Then I installed the 2.5" Techtonics tuning exhaust I've had all winter. They make great stuff and are so easy to deal with, plus they have so much experience to help guide you in the right direction. It came with some high-quality U-bolt style exhaust clamps, but I replaced them with band clamps because the U-bolts would catch on the edge of my garage as I pulled in. Also, the tail pipe on TT exhausts is always weird, I never know which direction it's really supposed to go.

Finally, I could start using it for errands and having fun driving around town, shaking down small issues like shift linkage alignment and exhaust rattles, and I put that hood back on as well.

Here I am giving it some revs to test the sound of the new exhaust. I was hoping for a better sound since I paid more for the Borla muffler, but it just sounds like a diesel, oh well. It does smoke a little in the video, I have the fueling adjusted pretty well, it rarely smokes unless the engine isn't warmed up yet.
https://imgur.com/xGxzP2wIn my last post I was concerned about not being able to get into reverse. this is still an issue. For now the solution has been to put the car in second gear then quickly shift to reverse and then it goes in smoothly. Something about the clutch isn't fully disengaging. I'm hoping with some more miles it will loosen up and start operating normally.