Hi Malone
I've just read your sad thread (I've been absent for a little while; although probably not missed! )
Could I just make a few diagnoses?
1. Looking at the picture of #4 piston and gasket it doesnt look like it was definitely blown at the point ringed by Jake... The oily smearing could have happened whilst lifting the head.... I can see the same grey 'seal' underneath the smear that's around the rest of the gasket...
2. You say you lost some water? Well as pointed out by someone water has a far greater SHC than pure anti F... About twice infact IIRC...BUT with a boiling point of 100 deg C at atmospheric and maybe 120deg C or so at 14.5lb/sqin compared with 200 deg ballpark for pure AF; A sustained push of the car soon gets the water up to its boiling point. So a coolant mixture is a compromise in SHC's and BP's
[I used to run all my gasser VWs on about 1% glycol no problem]
When I first got into diesels about 4 years ago I happened across an old boy who had spent a lot of time on these 1.6 TDs and he said the anti f mixture was almost essential as their operating temperature was too high for water when under load and you will push water out through the filler cap.
3. As you water was undoubtably boiling and evidently #4 bore has the least coolant around it then it was probably not helped by 'cavitation'.
4. Looking at the crown of the piston I see it is ultra clean AND dry with a heat 'tidemark' in the middle where at the speed you were going it was getting 'ucking hot' due to an (unfortunately) perfect combustion.
This may well have been the cause of the 'well fitted' piston to smear against the bore.
5. Assuming you didn't have ring damage; could your blow by have been caused by a combination of ring gap allignment (On another site I've thrashed this out about ring rotation and the possible benefits of pin locators) and with your super boost maybe the doubling or so of peak pressures at TDC creating the high blowby?
Anyway that's my spouting over... I await the wolverines making a meal of me ;o)
Whilst I've got peoples attention ...
What's the usual causes of individual hydraulic lifter weakness after 20000 miles?
Mark the Miser UK
Yeah, it was definitely a blow-by.
Bad news: scored cylinder walls.
Good news: the head gasket is in one piece :roll:


The following are pictures of the worst cylinder:




The head just sitting in the back of the Golf:


Live & learn.
A few options to get the car running again:
1) Bore the block to get rid of the scores. Can run 79.5mm (1.9L) pistons. A 3mm bore should clear the damage well. New bearings, new gaskets. I'm probably looking at $3,300 CAD for all new parts including a head rebuild w/ 3-angle valve job. It will become a pratically new engine with good performance potential. I won't be doing the complete rebuild labour myself as I'm not proficient enough for that task.
2) Get an used 1.6TD longblock with pump & turbo for $1,000 CAD. It has 180,000km and comes with warranty. I can sell the pump and turbo so in the end it may cost me roughly $500 CAD. I should ask if their warranty lasts more than 3 days 
I'm currently exploring other options.
Option #1 is appealing at first, but I'm not in the best financial position for that right now, and it's discouraged by the fact that I can import a low km euro PD130 or PD150 complete longlock for the same price delivered to my door. The PD has better fuel economy (for the power) and more power potential. On the other hand, if I ever switch to a PD, I might be bothered by the fact that all the time & money spent on the 1.6TD swap has gone down the toilet in just 3 days. I'll be happier to have a 1.6TD again and get back on the road soon. Further, I need to work on my Jetta TDI project.