Hi Rex:
Your engine is a solid lifter 1.6lTD. IDI, not DI.
I sell turbocharger upgrade/rebuild kits for your the 1.6lTD Garrett (click the thread in my signature for more info.) I do currently have a couple of them in stock, (so e-mail or IM me if you are interested in ordering one.) In addition to an upgraded heavy duty thrust bearing, my 1.6lTD Garrett rebuild kit includes a gapless turbine end sealing ring.
The wastegate can be removed, however new replacement wastegate cans or even wastgate assemblied for the Garrett are not available separately.
I do have a customer who has successfully swapped a good used wastegate off of another internally wastegated Garrett T3 turbo onto their VW 1.6lTD Garrett turbine housing, and I am able to guide you through this process if needbe. I have disassembled the Wastegate on my 1.6lTD Garrett and it cleaned up very nicely. If you disassemble your turbo to clean or fix it's wastegate, I would recommend installing new bearings and seals (found in my kits) while you're in there - your old ones are probably worn out.
If the "can" is rusted through, your wastegate will not work to control boost as it is supposed to. If it stays closed, the boost pressure will spike under hard acceleration and may open the blow off valve (which would vent pressure and lead to poor performance.) If the wastegate opens too early or "leaks" exhaust gasses by, the turbo will be slow to spool up and may not be able to develop full boost pressure.
You may also find this thread interesting (tear down pics of this turbo):
http://www.vwdiesel.net/phpBB/viewtopic.php?t=3252Hope this helps!