hmmmm..Coolant temp sensor..yep...thats right..
So which is the stat that Junya is talking about...Is it the engine temp stat?

 

Coolant temp sensor is towards the back of the engine bay accessed on the top. Thermostat is inside the housing attached to the engine on the passenger side front of the motor, accessed most easily from under the car. Go to step 12 in this write up for a better idea of its location http://www.audiworld.com/tech/eng35.shtml

 

It's on the driver's side, actually, connected to the water pump.

 

corrected thanks

 

I don't know why the hell they'd tell you to leave the thermostat in place. Granted, you have a 1.8T and changing it is a lot easier than it is for those of us with a V6 (we have to remove the front of our cars), but still - it's a $13 part and it's RIGHT THERE while the timing belt is being done. Change the damn thing. If nothing else, when the t-belt gets changed along with the other parts involved in the service, the coolant is drained anyhow. Why then have to drain it again when the t-stat gets changed? Just do it all at once. At best, you fix a problem in the making and save a lot of additional work down the line. At worst, you throw out a functional $13 part and replace it with another $13 part that is also functional.

I'm telling you, I hear more stories from people on here who have dealt with mechanics who are idiots (such scenarios are cases in point). All the more reason to take these jobs on yourself - you learn a lot about the car, save a lot of money, and you have a vested interest in the car being done right. To a mechanic, you're another open wallet. To you, the car matters more - it gets you to school/work, carries your family, carries you. You'll probably take more care in the work than a disinterested third party.

To address the OP, yeah your thermostat is likely stuck open. The green coolant, as stated above, is fine, although not the recommended ideal fluid. When you switch to G12, be absolutely sure you've flushed the hell out of the block and system multiple times before filling up with G12 - there are a lot of stories about adverse reactions between green coolant and G12 and a gelling reaction when they mix.