Hey Rob, my mkIII did the same thing. The person that had it before me never took care of it. it started doing it when they had it. it started to burn oil, so they just started dumping oil in it rather than fix the problem. anyways, what had happend is four of the rod bearings and two of the main bearings had spun and then the metal shavings from them clogged the oil pump, so none of the oil was getting to the top end of the motor. the cams wore grooves in the journals (if thats how you spell it) and screw up the whole head. had to rebuild the whole engine and here a year later finally this week im putting the engine back in the car
point being hope its not what happend to me. check and see if theres any metal shavings in the oil, if there is hopefully its not too late. you might have to replace the bearings and the oil pump but its better than spending over 3k rebuilding the motor.